For the first time in almost two decades, one U.S. dollar is equal to one euro.
After nearly 20 years of euro superiority, the two countries reached the parity point Tuesday.
While the U.S. has been dealing with rapid inflation, the European Union has seen similar price spikes exacerbated by Russia’s invasion of Ukraine.
EU and U.S. sanctions have stymied the flow of Russian oil into Europe, and the currency block is much more dependent on Russian energy than the U.S.
“This war is a ‘body-blow’ to Europe,” Robin Brooks, a leading economist, tweeted last week.
“It undercuts Germany’s growth model that’s based on cheap Russian energy. Europe is facing a seismic shift, and (the) euro needs to fall to reflect that.”
Euro-dollar parity could negatively affect U.S. export businesses. European companies that buy American will need to pay more money for the same amount of product, which could lead to belt-tightening.
It will also be a boon for importers, which could exacerbate a U.S. trade deficit. Some experts said the strengthening dollar was actually a reason for the U.S.’ GDP decrease in the first quarter of the year.
One demographic will surely benefit though Americans traveling to Europe for a summer vacation.
With $1 equal to €1, American tourists will be able to buy more for less — as long as they’re not going to the U.K. One U.S. dollar is still only worth 0.84 British pounds.