The dream of a global euro is worthwhile, and exporters in Europe are already feeling its effects

The strengthening of the euro is beginning to clash with the European Union's long-standing ambition to make it a global reserve currency that would compete with the US dollar. The euro has climbed above $1.20, which increases its international weight but also puts pressure on export-oriented economies, according to Politico.

Germany has been the most vocal, with Chancellor Friedrich Merz warning that the strong euro is significantly undermining the competitiveness of exporters. Concerns are also being voiced by the European Central Bank, which is monitoring the risk of inflation falling below its 2% target.

The European Central Bank has already indicated that exchange rate developments may influence future interest rate decisions.

In addition, a stronger euro makes Chinese imports cheaper and exacerbates the problems of European companies, which are already facing high costs, cheap competition from Asia, and US tariffs. The ambition to weaken the dominance of the dollar thus also brings unexpected economic costs.

(mja)