On August 24, the euro was hovering below parity against the dollar after its recent slump, and even a sharp interest rate hike by the European Central Bank could not save the euro’s losses. Analysts said it was not so much monetary policy, but more interlinked crises such as the recession and a sharp cut in Russian energy supplies that were weighing on the euro against the dollar EURUSD.
For the ECB, none of these will solve the above-mentioned crisis, despite special tools to reduce borrowing costs.
Sam Zief, head of global FX strategy at JPMorgan, said, “Rate rates have not been the dominant factor driving currency markets, especially over the past month, and the key issue has been sluggish global growth. When a big rate hike is to stabilize inflation expectations, it hurts growth prospects. rate hikes will not be able to support the currency.”