Business The euro recovers parity with the dollar before the imminent rise in...

The euro recovers parity with the dollar before the imminent rise in rates by the ECB

19 October 2022, Hesse, Frankfurt_Main: Christine Lagarde, President of the European Central Bank (ECB), passes a euro sign as she walks through the ECB’s entrance hall. Photo: Arne Dedert/dpa -Arne Dedert/dpa

The rise in interest rates that the European Central Bank (ECB) is expected to announce this Thursday is boosting the price of the euro against the dollar, surpassing parity between the two currencies for the first time since the beginning of October.

In this way, the euro cross against the ‘greenback’ reached $1.0041 this Wednesday, recovering parity against the US currency for the first time since last October 4, after having closed yesterday’s session at $0.9964.

The Governing Council of the ECB will meet this Thursday to set the position of its monetary policy and the consensus of analysts agrees in expecting a new rise of 75 basis points in interest rates, in line with the attack in September.

“We continue to forecast that the ECB will advance the hikes and approve another increase of 75 basis points this week,” anticipates Lale Akoner, senior market strategist at BNY Mellon Investment Management, for whom, with the hike this week and another in December, the ECB is giving itself room to pause at the beginning of 2023.

Along these lines, Gilles Moëc, chief economist at Axa Investment Managers, also forecasts that there will be a 75 basis point increase in rates, “which is already priced in by the market”.

“There is little doubt that the ECB will raise 75 basis points at this Thursday’s meeting,” adds the head of global market strategy at Natixis IM Solutions, Mabrouk Chetouane, for whom the ECB will have to clarify its roadmap and face to 2023, it will have to choose between preserving financial stability and fighting inflation in a context of high risk, especially in terms of economic growth.

The Governing Council of the ECB decided at its meeting last September to raise interest rates by 75 basis points, placing the interest rate for its refinancing operations at 1.25%, the highest since 2011, while the deposit rate reached 0.75% and the loan facility rate, 1.50%.

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