So apparently, Euro’s exchange rate to USD has been depreciating by -0.67% since the last 90 days. This is a small decrease from $1.1166 to $1.1092 Dollars per Euro.
If you look at this currency calculator, you can see that 1 Euro=1.11 USD. This seems like a significant difference and makes you wonder why the Euro is dropping like this.
Back in June, the ECB (European Central Bank) had predicted that the Euro would slow down to 1.2% in 2019 from the 1.8% that it was in 2018. Mario Draghi, who is the ECB’s president, said that he would essentially do interest rate cuts or create new money to buy government bonds if the economic condition in Europe did not change.
Because of what Draghi said, the Euro ended up dropping down 0.3% against USD, and their stocks went soaring.
He also stated that they would hold the rates as is until at least 2020. All of this is partially due to Britain’s potential departure from the EU.
Compared to the Federal Reserve, which tends to raise rates as the US’s economy grows, the European Central Bank instead holds its rate at lower levels than other countries.
A lot of the European government bond yields have started dropping into the negative, including Germany and France.
These drops can be even more dangerous to the European economy. When will it go back up? And will the Euro ever recover? Only time will tell.