The euro held up yesterday’s gains in US trading on Thursday. Most recently, the euro cost $0.9793. It was thus quoted somewhat higher than in the early European business. The European Central Bank (ECB) set the reference rate at 0.9706 (Wednesday: 0.9565) dollars. The dollar thus cost 1.0302 (1.0455) euros.
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Inflationary pressures in the euro zone however, stops. According to provisional calculations, the inflation rate in Germany rose to 10.0 percent in September, the highest level in 70 years.
“The inflation rate will remain in the double-digit range for the time being,” commented Thomas Gitzel, Chief Economist at VP Bank. “This is also affecting the ECB.” Another interest rate hike of 0.75 percentage points seems very likely at the next interest rate meeting in late October. “At the same time, discussions about an even bigger step are gaining momentum,” continued Gitzel. Rising interest rates tend to support a currency.
Despite the recovery on Wednesday, the euro is still under a lot of pressure on the financial markets. The Ukraine war, the energy crisis and the bleak economic outlook have recently caused the common currency to fall to a 20-year low. According to the leading economic research institutes, Germany will not be able to avoid a recession. Because of the energy crisis, the economy will shrink in the coming year.
NEW YORK (dpa-AFX)
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