The euro has depreciated against the dollar since the third quarter of 2021. But why is this happening? In the opinion of economists natixiscan be attributed both to the yield differential between the United States and the euro area and to the lack of attractiveness of the euro area equity market.
Does the euro depreciate against the dollar or does the dollar appreciate?
“In terms of the exchange rate against the dollar, the euro has depreciated less than the yen, more than the renminbi and as much as the emerging currencies other than China and the pound sterling. Therefore, it is the dollar that appreciates, and the euro does not depreciate against the dollar more than other currencies.
“The recent weakening of the euro is related to: A decrease in purchases of European bonds by non-residents; From the beginning of 2022, a decrease in purchases of euro zone shares by non-residents; And not other possible capital flows (resident capital, short-term capital flows).”
Source: Fx Street
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