According to analysts and financial strategists of both the global market and especially the European financial market, investors’ concerns regarding the single European currency, the euro (EUR), arose much earlier than at the present energy crisis and the war between Ukraine and the Russian Federation. Currently, the exchange value of the EUR is still below parity against the US dollar (USD).
On 19 October 2022, at 6:55 am CET, the global currency pair EUR/USD was trading on the international foreign exchange – Forex market at a mutual exchange rate of US$ 0.984 per EUR with the EUR daily drop of -0.142% against the USD. This mutual exchange rate was achieved when the USD began to strengthen again. According to the data of the US Dollar Currency Index (DXY), which compares the value of the USD with another six major world currencies, the point value of the USD increased by about one point in the last 12 hours or so. At the time mentioned, we saw the USD at a price level of 112.18 with a daily growth of +0.04%.
According to analysts and economic reporters, the problems with the euro and investors’ concerns regarding the possible breakup of the eurozone date back more than 10 years. In 2012, Greece was in the midst of a debt crisis and economic instability was spreading to other parts of the eurozone. The then president of the European Central Bank, Mr. Mario Draghi, who until recently served as Italian Prime Minister after leaving the ECB, gave a speech that is now credited with saving the euro. After ten years, the euro and the eurozone are still intact to take lessons from the words of the head of the ECB, Mr. Draghi. Therefore, one of the main problems at the core of this new crisis – referred to as an energy crisis – still remains that when the region of the eurozone countries or other European Union (EU) countries comes under economic pressure, economically strong countries, figuratively speaking, turn their heads away and solving the problems of others in solidarity remains only with political declarations without actual economic steps.
According to financial analysts, this fact becomes the main reason for investors’ concerns, because Germany itself is entering a recession and de facto forces the other countries of the eurozone and the EU to help only the Germans, the strongest economy of the eurozone and the entire EU so far. Therefore investors’ concerns are completely in place and there is a real danger of the eurozone breaking up. Among other things, there is also concern that two identical companies or households in the eurozone now have completely different financial conditions or financing, precisely because of the country in which they are located. “So, in that sense, your passport becomes a major determinant of your funding conditions,” said Angel Ubide of the hedge-fund firm Citadel. “Of course, there should be differences, but when the differences are very big, and then we can say that monetary policy has been fragmented,” he added.