Euro drops to $0.98, 20-year low, after Fed rate hike

The euro has dropped this Thursday to 0.98 dollars, minimum for 20 years, after the Federal Reserve (Fed) The US would raise its interest rates and make the announcement of more very rapid increases.

By 15:00 GMT, the euro was trading at $0.9819 against $0.9891 in the last hours of the previous day’s European foreign exchange trading. The European Central Bank (ECB) set the euro’s benchmark change at $0.9884, the Fed raised its interest rates by 75 basis points to between 3% and 3.25%, a decision that markets had already discounted.

Its members’ forecasts of the rates are very restrictive, with a further 125 basis points until the end of the year and a further 25 basis points increase in 2023 to 4.6%.

“After maintaining parity levels over the last month, the euro finally dropped under the weight of the rise in US rates,” Monex Europe analysts say. Added to this is that tensions with Russia over the war in Ukraine lead investors to avoid risk and buy dollars, which are considered a safe currency in times of crisis.

The Spanish Stock Exchange has lost this Thursday 1.24% and the level of 7,800 points, so it is close to last March levels and close to the lows of the year, affected by the fall of Wall Street after the rise in interest rates in the United States.

The national market benchmark, IBEX 35, dropped 97.5 points, 1.24%, to 7,774.7 points. In the week it falls 2.63% and in the year it accumulates a fall of 10.78%. With the euro at $0.9821 and a fall of close to 0.2%, Paris is at 1.87%, Frankfurt at 1.84%, London at 1.08% and Milan at 1.07%.