Here are the main consequences of the euro-dollar parity in a tab:
MORE SIMPLE EXPORTS: having a weak currency means being able to export your products more easily to countries that buy, instead, with a strong currency. This contributes to making European companies more competitive, but net of inflation, the rise of which risks watering down the exchange rate effect. Specifically, the United States is the third destination market for Italian exports, for a value of 61 billion dollars. Driving sectors in 2021 were mechanics, fashion, accessories and agri-food.
MORE EXPENSIVE IMPORTS, FROM HI-TECH TO ENERGY: the other side of the coin is represented by more expensive imports, because those who buy do so with a weaker currency. This applies to those who buy hi-tech products made in the USA, but also to companies that use US supplies or otherwise traded in dollars. There have already been increases in energy prices. But certainly the strengthening of the dollar against the euro does not help, for example, for the purchase of oil: the price of the barrel has always been done with the ‘greenback’. Added to this is the fact that, to compensate for the lower supplies of Russian gas, Italy, for example, has foreseen greater imports of liquid gas from the United States.
TRAVEL IN THE USA LESS CONVENIENT, BUT MORE TOURISTS IN ITALY: here too the same argument applies to imports and exports. Travel and shopping in the United States will be less convenient but, on the contrary, visiting Italy and shopping in the Bel Paese will be cheaper for American tourists. And this, given the strong recovery in tourist flows and the support they guarantee to various sectors of our economy, can represent an advantage.
INVESTMENT DEPENDS ON PORTFOLIO: For those in the eurozone who have invested in dollar-denominated financial assets, strengthening the greenback is not necessarily bad news. Obviously, the impact depends on your investment portfolio and, above all, on the moment you enter the market. To give an example: whoever converted 1,000 euros into dollars a year ago, when the exchange rate was 1.18 dollars per 1 euro, thus obtaining 1,180 dollars, will benefit today from the conversion into euros because, with the current exchange rate at par, will get around 1,180 euros.
Source: Ansa
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