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I think this happened today at somepoint: https://twitter.com/alexsalvinews/status/1546518198148808708 https://twitter.com/alexsalvinews/status/1546518198148808

I think this happened today at somepoint: https://twitter.com/alexsalvinews/status/1546518198148808708 https://twitter.com/alexsalvinews/status/1546518198148808708 But, I decided to link to the bloomberg article since it gives a better context. To my non-expert intuition, it seems a double-edge. Currency devaluation brings the cost of European manufactured G&S cheaper and brings a boost to the economy, and hurts US exports. On the other hand, Bloomberg cites devaluation of Euro would bring more investments in the US as it is now a parity.

stncls 4y ago
Re: title ("lowest since 1999"): It's actually since December 2002. 1999 is the first time the EUR reached parity with (then dipped below) the USD. https://www.google.com/search?q=1+eur+in+usd https://www.google.com/search?q=1+eur+in+usd
- systemvoltage 4y ago
  Nice catch, corrected the title.
- omnibrain 4y ago
  I'm pretty sure it was in January 2000. A few days before the 20th. Because the 20th was my grandfathers birthday and I visited him that day, but bought a Wallstreet Journal (Or Financial Times International Edition) with the headline that the euro plunged below parity for the first time at an airport either in Orlando or at the layover in Washington. I may still have this issue in my memorandum box. But no, I won't go looking for it. ;)
dwater 4y ago
As a non-economist, that's one of the basic things about trade that was surprisingly hard to wrap my head around. Your currency is high, that's good because you now have much greater buying power outside your country! Everyone else's stuff is cheap! Also, it's bad, because it means your stuff is more expensive, so nobody outside wants to buy it, so your exports decline. Basically it's just: high currency is good if you're importing, bad if you're exporting.
- TheOtherHobbes 4y ago
  Keep in mind forex prices are all gambling anyway. These prices are the opinion of a relatively small number of people, some of whom - like certain well known banks - have a long record of bad faith price fixing. For example: https://en.wikipedia.org/wiki/Libor_scandal https://en.wikipedia.org/wiki/Libor_scandal
  - blibble 4y ago
    > These prices are the opinion of a relatively small number of people complete rubbish, FX is the most liquid and actively traded instruments there are
    - neilpanchal 4y ago
      Yes. > In terms of trading volume, it is by far the largest market in the world, followed by the credit market. Furthermore: > Trades between foreign exchange dealers can be very large, involving hundreds of millions of dollars. Because of the sovereignty issue when involving two currencies, Forex has little (if any) supervisory entity regulating its actions. https://en.wikipedia.org/wiki/Foreign_exchange_market https://en.wikipedia.org/wiki/Foreign_exchange_market
  - wyager 4y ago
    Total nonsense. Forex markets are extremely liquid; narrow and deep. Right now, I could exchange 3M USD for euros (or vice versa) and not even move the price by $0.0001.
- systemvoltage 4y ago
  OTOH, intuitively, as EU G&S get's cheaper, the market demand for EU G&S spikes, driving the prices up to a different equilibrium than before. It exasperates shortages in EU with secondary/tertiary supply chain effects slogging down the economy. One anecdotal example is Czech based JetBrains. They announced a few days ago that they're increasing subscription prices. I presume, they have a huge sales numbers in the US. I really don't understand macro-econ on this scale, Bloomberg article is good, but would be fascinating to read deep analysis of pros and cons.
christkv 4y ago
I would think it would mean more investment in the euro zone as you get a big discount on any investments paid in dollars compared to a year ago.
- littlestymaar 4y ago
  The article is actually talking about public debt, which is different from “investment” in the FDI sense, but is still “investment” from the investor's PoV. I have a colleague who likes to say that “every concept expressed with less than three words is adding confusion instead of reducing it”, and I like this saying more and more every day.
littlestymaar 4y ago
What you're describing is the “long term” possible outcome, but in the meantime, plummeting Euro is a major reason for high inflation in the EU. This is the most concerning “second edge”.
paganel 4y ago
Devaluation of the euro also increases the real price we have to pay for oil and gas.
Proven 4y ago

stncls 4y ago

Re: title ("lowest since 1999"): It's actually since December 2002. 1999 is the first time the EUR reached parity with (then dipped below) the USD. https://www.google.com/search?q=1+eur+in+usd https://www.google.com/search?q=1+eur+in+usd

systemvoltage 4y ago
Nice catch, corrected the title.
omnibrain 4y ago
I'm pretty sure it was in January 2000. A few days before the 20th. Because the 20th was my grandfathers birthday and I visited him that day, but bought a Wallstreet Journal (Or Financial Times International Edition) with the headline that the euro plunged below parity for the first time at an airport either in Orlando or at the layover in Washington. I may still have this issue in my memorandum box. But no, I won't go looking for it. ;)

dwater 4y ago

As a non-economist, that's one of the basic things about trade that was surprisingly hard to wrap my head around. Your currency is high, that's good because you now have much greater buying power outside your country! Everyone else's stuff is cheap! Also, it's bad, because it means your stuff is more expensive, so nobody outside wants to buy it, so your exports decline. Basically it's just: high currency is good if you're importing, bad if you're exporting.

TheOtherHobbes 4y ago
Keep in mind forex prices are all gambling anyway. These prices are the opinion of a relatively small number of people, some of whom - like certain well known banks - have a long record of bad faith price fixing. For example: https://en.wikipedia.org/wiki/Libor_scandal https://en.wikipedia.org/wiki/Libor_scandal
- blibble 4y ago
  > These prices are the opinion of a relatively small number of people complete rubbish, FX is the most liquid and actively traded instruments there are
  - neilpanchal 4y ago
    Yes. > In terms of trading volume, it is by far the largest market in the world, followed by the credit market. Furthermore: > Trades between foreign exchange dealers can be very large, involving hundreds of millions of dollars. Because of the sovereignty issue when involving two currencies, Forex has little (if any) supervisory entity regulating its actions. https://en.wikipedia.org/wiki/Foreign_exchange_market https://en.wikipedia.org/wiki/Foreign_exchange_market
- wyager 4y ago
  Total nonsense. Forex markets are extremely liquid; narrow and deep. Right now, I could exchange 3M USD for euros (or vice versa) and not even move the price by $0.0001.
systemvoltage 4y ago
OTOH, intuitively, as EU G&S get's cheaper, the market demand for EU G&S spikes, driving the prices up to a different equilibrium than before. It exasperates shortages in EU with secondary/tertiary supply chain effects slogging down the economy. One anecdotal example is Czech based JetBrains. They announced a few days ago that they're increasing subscription prices. I presume, they have a huge sales numbers in the US. I really don't understand macro-econ on this scale, Bloomberg article is good, but would be fascinating to read deep analysis of pros and cons.

christkv 4y ago

I would think it would mean more investment in the euro zone as you get a big discount on any investments paid in dollars compared to a year ago.

littlestymaar 4y ago
The article is actually talking about public debt, which is different from “investment” in the FDI sense, but is still “investment” from the investor's PoV. I have a colleague who likes to say that “every concept expressed with less than three words is adding confusion instead of reducing it”, and I like this saying more and more every day.

littlestymaar 4y ago

What you're describing is the “long term” possible outcome, but in the meantime, plummeting Euro is a major reason for high inflation in the EU. This is the most concerning “second edge”.

paganel 4y ago

Devaluation of the euro also increases the real price we have to pay for oil and gas.

Proven 4y ago