What are Euro Dollars
Dollar rate - Euro / Dollar exchange rate
Info: Interesting facts about the dollar rate
The most important things at a glance
- Both raw materials and gold are quoted in USD
- A strong euro makes gold cheaper by comparison
- In comparison, a weak euro makes gold more expensive
- Practically irrelevant for private gold investors
Definition: What does "dollar rate" mean?
In this country is the term Dollar rate a colloquial abbreviation and means the currency or exchange rate euro - dollar. Conversely, it is also the answer to the question: How much is one euro worth in US dollars? Example:
- Exchange rate of 1.1000 means: For 1 euro you get 1.10 US dollars
- An exchange rate of 1.4500 means: For 1 euro you get 1.45 US dollars. You would get "more dollars" for your euro, the purchasing power of the euro in relation to the dollar would have become stronger.
That is why they also say:
The euro "rises" or "strengthens" (against the dollar) when the exchange rate rises.
The euro "falls" or "weakens" (against the dollar) when the exchange rate falls.
Price changes are usually specified to the fourth decimal place. Since the introduction of the euro, it has moved in an exchange rate zone of 0.8252 to 1.5990. The purchasing power of the euro against the dollar can therefore fluctuate considerably.
The world's reserve currency, the dollar, affects everyone
A strong euro is less favorable for export-oriented companies in this country, as goods are comparatively more expensive in the USA.
Conversely, imports become cheaper if the euro is strong. US goods in this country are cheaper. This also applies to most of the major commodities, as these are traded on a dollar basis. These include oil, but also gold, silver and other precious metals.
But everyone can feel the effects of the dollar-euro exchange rate directly. A strong euro makes a vacation to the USA comparatively cheap. Everything you buy in the holiday country is cheaper. And vice versa.
However, many economists now assume that the era of Dollar as the world's reserve currency is coming to an end.
Who determines the dollar rate?
Why is the dollar rate rising? Why is the dollar rate falling? As in every market, the laws of supply and demand, which define a price in a complex interplay, also apply here. In particular, this is the market of forex traders. Important influencing factors are:
- (Interest) policy of the central banks
- General politics and economic developments
- Germany's export volume to the USA: The higher the demand for euros, the more the demand for euros increases, as Americans have to pay for these imports in euros. And vice versa.
Dollar rate table
Overview: This is how the dollar rate and the gold price are related
|Strong euro (= weak dollar) means:||Weak euro (= strong dollar) means:|
|Buying gold in this country is comparatively cheaper||Buying gold in this country is comparatively more expensive|
|an existing investment in gold in this country loses relatively in value||an existing investment in gold in this country increases in value relatively|
|Selling gold is relatively less favorable in this country||Selling gold is relatively cheaper in this country|
Does the dollar rate have an impact on private gold investors?
In theory yes, in practice no. Because anyone who wants to buy or sell gold privately in this country can do so with the local dealer. Buying and selling as well as the resulting profits or losses are therefore always realized in euros. So as long as you stay in the euro currency, the dollar-euro exchange rate remains In fact not relevant for private gold investors. And if there is no real intention to sell an existing gold investment, the current price is only theoretical anyway.
It is different with precious metal dealers. For them, the dollar exchange rate is important when they import gold from the USA and then sell it in this country on a euro basis.
Conclusion: For most private gold investors in this country, in fact, only the gold price in euros counts. Even if it has already happened that the gold price has risen on a dollar basis over a certain period of time, while it has fallen over the same period on a euro basis. This is exemplified by the year 2017:
Can I benefit from exchange rate fluctuations?
Theoretically you could as a private gold investor Euro-dollar exchange rate fluctuations to your advantage by exchanging euros for dollars at a suitable time, buying gold in the USA or from an international dealer and then bringing it across the border here.
To sell, you could bring the gold back abroad and sell it there for dollars. Then you exchange the sales proceeds back into the local euro currency.
However, you should then also know trustworthy precious metal dealers overseas, be aware of possible customs regulations when importing or exporting or think about the extent to which it makes sense to store your gold abroad. Specific tax rules can be relevant and should be correct Dollar rate forecasts can meet.
Forex Trading & Forex Market
At the Forex trading (also: currency trading or forex trading, from English: foreign exchange) currency pairs or currency pairs are traded. A currency pair consists of the base currency or base currency (here: euro) and the quote currency or quote currency (here: US dollar). The US dollar is by far the most widely traded currency so far. This also applies to the EUR / USD currency pair.
The Currency market is the market where currencies are traded. It is the largest and most liquid financial market in the world. The daily trading volume of all forex was over $ 5 billion in 2016. Trading does not (or hardly) take place on stock exchanges, but is carried out on a decentralized basis between the market participants, most of whom are banks. The largest German foreign exchange dealer is Deutsche Bank.
Euro & Dollar - historical development
Foreign exchange trading in its current form has existed since 1973. Before that, the external value of currencies in the Bretton Woods system was tied to the US dollar, which in turn was tied to gold at a dollar rate of USD 35 per troy ounce and was also exchangeable for gold. The EUR / USD currency pair has been traded since January 4th, 1999, which preceded the introduction of the euro in 2002. The opening price was $ 1.1789 for 1 euro.
The new common currency initially suffered significant losses. On January 27, 2000 the exchange rate parity (Equal value of two currencies) fallen below. In the same year, on October 26, 2000, the euro marked its previous level at $ 0.8252 All time low.
In 2002 parity was reached again and then exceeded. Since then, the euro has not fallen below the $ 1 mark. In the wake of the financial crisis that began in the US in 2007, the euro hit its previous level in July 2008 All time high from $ 1.5967.
Euro-dollar exchange rate: Exchange rate development from 1999 with annual averages
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