The U.S. Currency

For those who don’t know, the exchange rate is the value one currency will be exchanged for another currency. As of May 10th, 2019 one dollar could be exchanged for .89 euros, but as of May 10th, 2024, it can now be exchanged for .93 euros. If it hasn’t been clear by now the dollar is depreciating relative to the Euro. With the current depreciation come some advantages primarily being in the amount the US  imports and exports. Since prices are lower compared to Europe, exports would increase and citizens won’t be importing as much. This overall increase in net exports benefits our economy and increases the country's output. 

However, things may not be the case with recent findings. Just at the start of this month, Federal Reserve Chair Jerome Powell said inflation has been higher than anticipated and the high interest rates will remain. This plays a drastic role in the exchange rate. With the higher interest rate, the exchange rates may get back to where they were earlier. This could happen because the higher interest rates attract European investors to invest in U.S. bonds to earn higher rates of return. This increased demand for the U.S. dollar would increase its value relative to the euro.