Eurozone Exchange Rate December 2016


Eurozone: Euro heads towards parity with dollar

December 16, 2016

Divergent monetary policy directions between the two largest economies in the world drove the euro down to near parity with the dollar in December. On 15 December, the euro traded at a 14-year low of 1.04 USD per EUR, which represented a 2.9% depreciation from the same day of the previous month. The result represented a 4.6% loss of value from the same day last year and the euro was down 4.1% year-to-date.

A widening gap between interest rates on either side of the Atlantic is largely behind the currency’s depreciation. In addition, subdued growth in the Eurozone, while the U.S. economy gains steam, and rising political concern over populist parties is adding to the currency’s fall.

FocusEconomics Consensus Forecast panelists see the euro trading at 1.06 USD per EUR at the end of 2017 and depreciating to 1.11 USD per EUR by the end of 2018.

Author: Angela Bouzanis, Senior Economist

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