December 9, 2022

Taylor Daily Press

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The strong dollar is good for our exports, but your vacation in the US will be more expensive

The strong dollar is good for our exports, but your vacation in the US will be more expensive

A year ago you could get about $ 1.22 per euro, but now it is only about $ 1.05. So the euro has weakened, or, if you look at it the other way around, the dollar has strengthened.

There are pros and cons to that. Benefits first. The company favors exports to the United States from the Netherlands or from the Eurozone. If you charge the same price in euros, an American buyer will have to pay less dollars for your product, so the demand will increase. Will a Dutch exporter get more euros for the dollar he receives in the United States.

Also, the profits of high-income companies in the United States, such as Aholt Delhaise, will be higher when converted into euros.

More tourists from the United States

Also, American tourists who go on holiday to the Eurozone get more euros for their dollars, thus making the holidays cheaper for them. They can buy bigger pizza and more souvenirs with their hard earned money.

As a result, more and more Americans are crossing the Atlantic for their vacation, which is good for the economy of Amsterdam and Kithorn.

Cons

But you guessed it, it works the other way around. Then the strong dollar can actually be a disadvantage. For example, if you import goods from the United States, you will lose more euros or buy less for the same amount of euros.

Traveling to New York or going through the Rocky Mountains can become very expensive for us.

Curaao, Aruba and Dubai are more expensive

This also applies to the holidays For example Curaக்கோao, Aruba or, among other things, Dubai. Because in Curaao (and the Dutch part of Sint Morton) they also killed the Antilian guilder, and in Aruba the The. FluorineThey are linked to the US dollar. Also in Dubai, one of the emirates of the United Arab Emirates, the value of the dirham is linked to the dollar.

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If you go Among others In Bonaire, Ecuador or Panama, you can even pay with dollars. Traveling in that direction has also become expensive.

Commodity prices in dollars

Rabbank’s macro-economist Boss von Kefen says the image of winners and losers will not always be black and white, but he follows the policy of the European Central Bank. Because commodity prices are often in dollars. “So exporters who use the strong dollar will probably have to buy parts or raw materials, which will cost them more euros.”

In addition, due to the lockdowns in that country, there is less demand now from China (its currency is linked to the dollar), so the benefit of a stronger dollar is underestimated. Problems in supply chains in China make it very difficult to import certain parts, so companies exporting from the Netherlands cannot make certain products or make certain products harder.

This strengthened the dollar

For some reason the dollar has become stronger and the euro weaker. For example, interest rates in the United States are higher than in the eurozone and are expected to rise higher than the eurozone this year, says Philip Marie, an economist at Robobank in the United States. “Inflation is higher in the United States than in the Eurozone, and central banks often raise interest rates to control inflation.”

Investors will prefer bonds (with higher yields) in the US over the eurozone, which will increase demand for the dollar, which will cause the dollar to rise.

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Safe refuge

Moreover, the dollar has long been seen by investors as a safe haven. For example, if you borrow from the US government, it is estimated that your chances of getting your money back are higher than the chances of buying bonds from Greece. In the current period of unrest, partly due to the war in Ukraine, investors are more likely to make a firm choice.

Van Keefen says the European economy will soon and severely suffer if Russia stops supplying oil or gas.