September 25, 2022

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Parity between the euro and the dollar, who wins and who loses – Economy

Here are the main consequences of the parity of the euro against the dollar in a tab:

More simple exports: Having a weak currency means being able to export your products more easily to countries that buy, instead, with a strong currency. This contributes to making European companies more competitive, but net inflation, the rise of which reduces the impact of the exchange rate. Specifically, the United States is the third destination market for Italian exports, with a value of $61 billion. The driving sectors in 2021 were mechanics, fashion and accessories and agri-food.

More expensive imports, from high technology to energy: the other side of the coin is represented by more expensive imports, because those who buy do so with a weaker currency. This applies to those who buy high-tech products made in the US, but also to companies that use US supplies or trade in dollars. There have already been increases in energy prices. But the strengthening of the dollar against the euro certainly does not help, for example, with the purchase of oil: the price of a barrel has always been with the “dollar”. Added to this is the fact that, to compensate for the decline in Russian gas supplies, Italy, for example, expected greater imports of liquid gas from the United States.

Traveling in the USA is less comfortable, but more tourists in Italy: here too the same argument applies to imports and exports. Traveling and shopping in the United States will be less convenient, but on the contrary, visiting Italy and shopping in Bel Paese will be cheaper for American tourists. And this, given the strong recovery in tourism flows and the support it guarantees to different sectors of our economy, could represent an advantage.

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Portfolio-based investing: For those in the Eurozone who have invested in dollar-denominated financial assets, a strengthening US currency is not necessarily bad news. Obviously, the effect depends on your investment portfolio and, above all, on the moment you enter the market. To give an example: From about 1000 euros to dollars a year ago, when the exchange rate was 1.18 dollars per 1 euro, thus getting 1180 dollars, today he will benefit from the conversion to euros because, with the current exchange rate being equal, I will get about 1180 euros .