If you don’t have a local Euro bank account, can I still take advantage of the euro exchange rate? Yes, you can buy your Euros in advance of any payments.
The US Dollar has strengthened on the back of the Ukraine/Russia war, concerns for economic growth and covid lockdowns in China. We are now at 5-year highs, making it a great time to buy Euros.
Why has the US Dollar strengthened and the Euro weakened?
• The US Dollar is known as a safe-haven currency. This means that people will pull their money out of risker assets and put them into safer options in times of uncertainty. Safe-haven coins are known to retain or increase value when there are global issues.
• Despite covid restrictions starting to ease in many countries, the situation in China is completely reversed. Lockdowns and regulations are causing concern for their economic growth.
• Global supply chain issues are happening across the world. Firstly, due to covid and now due to the situation in Ukraine.
• Ukraine/Russia war shows no sign of ending. There are also concerns about economic growth and the impact of sanctions imposed on Russia and by Russia. For example, it is reported that Putin will turn the gas off to Poland and Bulgaria, putting more pressure on the Euro.
• Inflation and interest rate hikes are hot topics for 2022. The European Central bank has indicated that it may raise interest rates in July after the end of its asset purchase program. In comparison, the FED is looking to raise rates in May. The latter may help support the US Dollar. However, it would seem that economic data has little effect and is being overshadowed by more significant concerns.