How exchange rates have changed in the past year | National

For months, the US exchange rate with the 19-nation eurozone has been falling—to the point where, when it hit US dollar parity, the common European currency was the weakest since its debut over 20 years ago. The reasons for this drop include European—mainly German—energy dependence on Russian pipeline gas. There are growing fears in Europe of a severe recession worsened by energy shortages, causing factory shutdowns and employee furloughs for EU industries this winter. The Danish krone pegged to the euro through a fixed exchange rate is why its change in value is the same.

The value of the British pound has plunged so dramatically that it was, on Sept. 7, 2022, the weakest it had been, adjusted for inflation compared to the dollar since 1985. This drop in value is due to a looming global recession, combined with surging British and EU inflation. There are also concerns that public stimulus spending and tax cuts proposed by Prime Minister Liz Truss’ new government could exacerbate inflation pressures.

The dollar is stronger than the Norwegian krone, likely due to the Eurozone economy weakening, oil price fluctuations—Norway is a major oil and gas exporter—and changes, respectively, in the countries’ interest rates.

The Swedish krona and the Swiss franc also fall behind the dollar because of the Fed aggressively raising rates. Investors have traditionally viewed the Swiss franc as a safe haven due to two centuries of Swiss neutrality and, until recent years, strict banking secrecy laws. But even as one of the wealthiest countries in the world, Switzerland is not immune from European gas shortages and is being forced to conserve energy this winter.

In reaction to the US Federal Reserve raising rates, the Bank of England increased interest rates by half a point. The European Central Bank will likely continue to raise rates. Norway and Switzerland have also raised rates, as has Sweden’s central bank.


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