Financial professional warns: “The euro has become a soft currency”

Created: 07/12/2022Updated: 07/12/2022 2:20 p.m

By: Lisa Mayerhofer

In 2020 and 2021, the federal government paid around 24 billion euros in short-time work benefits.

© Monika Skolimowska/dpa/symbol image

The euro exchange rate reaches historic lows.

The euro is now more similar to the Italian lira than the German D-Mark, judges finance professional Andreas Beck.

Munich – The exchange rate of the euro has reached a one-to-one exchange rate with the US dollar.

The common currency reached parity with the US currency on Tuesday afternoon (July 12).

The last time a euro was worth exactly one dollar was in 2002 – just after the introduction of the euro as cash. 

Euro rate at a low: energy crisis weighs on it

A major reason for the weakness of the euro is the fear of an energy crisis in Europe.

The Nord Stream 1 gas pipeline started to be shut down for maintenance on Monday. "The risk of an energy crisis in Europe is the sword of Damocles, which is hovering over the euro exchange rate and weighing on it," said currency expert Ulrich Leuchtmann from Commerzbank.

In his opinion, there can hardly be any relief before the end of the pipeline maintenance work, which usually takes ten days.

And every day the maintenance work takes longer than planned could further weigh on the euro, Leuchtmann warned.

Expert: The euro is more similar to the Italian lira than the German deutschmark

But how will the euro develop over a longer period of time?

In an interview with

, he explains

Financial professional Andreas Beck why he doesn't believe in a reversal in the fall in value of the euro.

"Originally, the euro was supposed to be the successor to the D-Mark, which Germany wanted when it was introduced," says Beck of the news portal.

This means that the euro should be a strong currency.

But with the Corona aid fund, “everything got out of hand”.

Any rules designed to ensure the euro remains a strong currency "have been jettisoned and not reintroduced."

In terms of construction, the euro is now more similar to the Italian lira than the German deutschmark.

Beck told

: “Switzerland has given up keeping the franc in relation to the euro.

We have become a soft currency and are treated as such by Switzerland.” The financial professional also appeases: “It won't end the world.

The Italians are already used to that;

they are not as surprised as the Germans.”

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However, the Germans and the German economy would have to adapt to changes.

“You can act very differently with a strong currency.

For example, German companies will no longer get the best graduates,” he said in an interview with

.

For investors, too, it no longer makes sense with a soft currency to simply invest the money at fixed interest rates.

"The Italians are buying inflation-indexed investments," Beck explains to the news portal.

.