Earlier this week, the euro fell to its lowest value for almost 20 years against the dollar, closing at USD 0.99. The revaluation of the dollar against the euro is driven by the rise in interest rates by the Federal Reserve (FED) during 2022, explains the professor of economics at the University of the Americas (UDLA), Fidel Jaramillo.
With the increase in interest rates in the United States, investors prefer to convert their resources to dollars and move them to that country, which offers more profitability than Europe. In this context, the price of the euro reached parity with the US dollar on July 12, something that had not happened since 2002. And, from January 1 to September 5, the dollar has already appreciated 15% against the euro.
How does it affect Ecuador?
The European Union is the third largest buyer of Ecuadorian products. Hence, the revaluation of the dollar against the euro will have effects on trade, says Jaramillo. Shrimp and bananas are the main non-oil products that Ecuador sells to Europe. Together they represented 52% of the USD 1,968 million of non-oil exports to that bloc in the first half of 2022.
One of the most affected is the banana. The executive director of the Banana Exporters Association, Richard Salazar, explains that sales of the fruit to Europe fell 13% between January and July 2022, compared to the same period in 2021.