How much has the euro fallen against the US dollar in six months?

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The Euro Has Declined by Nearly 20 Per Cent Against the US Dollar in Six Months

In the past six months, the euro has experienced a significant depreciation, falling by nearly 20 per cent when measured against the US dollar. This downward trend in the euro's value has implications for the European Central Bank's (ECB) efforts to stimulate the eurozone's economy, primarily by making exports cheaper and imports more expensive. While the ECB officially maintains no specific exchange rate target, the weakening euro is seen as a tool to boost inflation, which has been a concern for the bloc.
Impact on Inflation and Economic Stimulation

The decline in the euro's value is viewed as a key mechanism for the ECB to combat deflationary pressures and push inflation towards its target of just below 2.0 per cent. In February, consumer prices within the 19-country eurozone bloc saw a decrease of 0.3 per cent. The ECB's own economic projections suggest that a weaker euro could contribute significantly to reversing this trend, potentially bringing inflation back towards the desired level by 2017.
Potential Risks of Excessive Depreciation

Despite the immediate benefits for inflation, analysts caution that an excessively rapid or pronounced decline in the euro's value could have negative repercussions. Central banks typically become concerned when exchange rate fluctuations are too volatile. While the ECB does not appear alarmed at present, internal scenarios developed by their economists indicate that an overly weak euro could, by 2017, drive eurozone inflation above the 2.0 per cent target. This scenario was calculated assuming an exchange rate of US$1.04 per euro.
Quantitative Easing and Currency Devaluation

The ECB's policy of quantitative easing (QE), involving large-scale bond purchases, is identified as a factor contributing to the euro's depreciation. The bank embarked on a €1.14 trillion bond purchase programme, injecting €60 billion monthly until September 2016, with the aim of increasing liquidity. Economists suggest this programme effectively acts as a currency devaluation tool, as the purchase of eurozone sovereign bonds makes them less attractive to international investors, prompting capital outflow and driving down the euro's value. Speculation surrounding the potential implementation of such a QE programme as early as last summer had already initiated the euro's downward trajectory.

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How much has the euro fallen against the US dollar in six months?

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