Finance        21 января 2020        1573         0

What factors determines the euro exchange rate

Dozens of countries in Europe and other parts of the world use the euro to calculate the currency, which appeared on the world financial market several decades later than the dollar, but is now almost as popular. It is used for calculations both by European countries, and some states in Africa and islands in the Pacific Ocean. A significant distribution area of ​​this currency causes considerable interest in the reasons affecting changes in its exchange rate among various financial institutions and investors, as well as traders.

The euro exchange rate is influenced by various circumstances, including the financial as well as the economic situation in the United States of America, because this currency is the main competitor to the US dollar. When positive changes in the United States accompany the growth of the American currency, the euro is falling, but if the deterioration of any processes negatively affects the dollar, then the European currency rises.

However, the euro exchange rate is affected not only by events in America, but also by the situation in the eurozone itself. Here, the main macroeconomic factors are the GDP growth rate, inflation rate, as well as the employment rate of the population (or unemployment rate). The official analytical forecasts of world banks and investment funds can have a significant impact on the rate of this currency (often, regardless of whether they come true or not).

The euro exchange rate is partially influenced by the interest rate of the European Central Bank, the stability of the banking system, and sometimes the change of power in any state. By the way, the euro against the dollar is affected not only by economic factors, but also by political and force majeure circumstances (sanctions, a change in political course, technological disasters, cataclysms and terrorist acts). The euro is most affected by economic data from Germany, the country with the largest economy in Europe.

As for the euro against the ruble, the price of crude oil in the world market is important here. Profit from the sale of this energy carrier makes up a significant share of the budget of the Russian Federation, therefore, the rise in price of black gold (as oil is sometimes called) strengthens the ruble against the dollar, as well as against the euro. But, as already mentioned, the main influence on the exchange rate of the European currency is provided by the actions of the European Union regarding the stabilization of the economy in those states that use the euro as their main means of payment.

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