Weaker US dollar creates additional hurdle for exporters
Having strengthened in the immediate aftermath of Donald Trump's election victory last year, the dollar has steadily slipped against the euro since the start of 2025.
Compared to mid-January, the euro is currently up almost 15% against the US currency.
"There's been a number of factors contributing to it but a lot of it has to do with the presidency of Donald Trump," said Roman Ziruck, senior market analyst at Ebury.
"Markets are concerned with the trade issues - we see that the US has moved on to a trade protectionism path and this is something that is casting shadows on its economic prospects," he said.
"Also markets have been relatively concerned with the US fiscal situation - the US has been running significant fiscal deficits in recent years, even though its economic activity has been rather strong. So it's quite uncharactaristic of the period. And the One Big, Beautiful Bill, which passed the Senate just yesterday, is promising to increase the US debt in the coming years," he added.
Markets are also uneasy about attempts by the US President to influence central bank policy - through his criticism of their interest rate stance, and indications that he is considering a change in the Federal Reserve's leadership.
"This is something that we have not really witnessed in developed economies in recent years," said Mr Ziruck. "This is something that we are more likely to see in emerging markets - but even in those places it's not particularly common."
With a deadline on US-EU trade talks looming, and suggestions that a 10% tariff will become the "new normal" for firms, a weaker dollar presents an extra level of pressure on exporting firms.
"It's another hurdle," he said. "The EU is an exporting economy - it's going to be an issue, it's something that is leading to a deterioration in the economic prospects in the near term. But longer-term prospects are helped by [Germany's] fiscal stimulus."
The weaker dollar may offer some relief to consumers in certain areas, though, not least those that are travelling to the US in the coming weeks.
Given that oil is priced in dollars, it also presents a potential benefit there too - especially as global oil prices have fallen back from their recent highs in the wake of attacks between Israel and Iran.
"We have seen a significant reversal in the oil futures and right now we are back to levels where we were before the onset of the Israel-Iran conflict," said Mr Ziruck.
"If we price that in euros, that certainly is a factor that should be contributing to a slightly calmer price environment in the euro zone," he added.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Irish Times
30 minutes ago
- Irish Times
Irish rents rise by 115% since 2010, more than four times EU average
Average rents in Ireland rose by 115 per cent between 2010 and 2025, according to new figures from Eurostat. The cumulative increase was more than four times the European Union (EU) average (27.8 per cent). Eurostat said rents increased in 26 EU countries between the first quarter of 2010 and the first quarter of 2025, with the highest increases registered in Estonia (220 per cent), Lithuania (184 per cent), Hungary (124 per cent) and Ireland (115 per cent). Greece was the only country where rent prices decreased (-11 per cent). READ MORE Eurostat also assessed the changes in house prices over the same 15-year period. Average prices in Ireland were found to have risen by just over 80 per cent compared to an EU average of 57.9 per cent. [ Private rental sector has lost more than 43,000 properties over past five years Opens in new window ] The figures show Irish house price have been on something of a rollercoaster since the depths of the financial crisis in 2010 when they fell by 12.5 per cent. That was followed by declines of 17.8 per cent, 14.7 per cent and 0.5 per cent in 2011, 2012 and 2013. However, they rebounded in 2014, rising by 15.2 per cent and rose every year, barring 2023, since. How the wealthy are buying up land to avoid inheritance tax Listen | 22:03 When comparing the first quarter of 2025 with 2010, house prices increased more than rents in 21 of the 26 EU countries for which data are available, Eurostat said. They more than tripled in Hungary (260 per cent) and Estonia (238 per cent) and doubled or more than doubled in nine EU countries: Lithuania (194 per cent), Latvia (154 per cent), Czechia (147 per cent), Portugal (130 per cent), Bulgaria (125 per cent), Austria (113 per cent), Luxembourg and Poland (both 102 per cent) and Slovakia (100 per cent). [ Landlords rail against rent control reforms Opens in new window ] Italy was the only country where house prices decreased, falling 4 per cent. Eurostat noted that house prices and rents in the EU followed a similar pattern between 2010 and the second quarter of 2011 'but have since evolved differently'. 'While rents have increased steadily, house prices have followed a more variable pattern, showing a staggering increase between Q1 2015 and Q3 2022, followed by a small drop and stabilisation, before increasing again since 2024,' it said.
Irish Times
an hour ago
- Irish Times
Ryanair to increase size of free cabin baggage allowance
Ryanair is to increase the size of it free cabin baggage allowance. The low-cost Irish carrier is now granting a more generous allowance, just as lawmakers in Europe debate how much baggage passengers can bring on board for free. It's an amount equal to the size of a six-inch cube — enough for customers to bring a couple of extra T-shirts along. Currently, Ryanair passengers are allowed to take a free bag measuring 40x25x20cm onboard and place it under the seat in front. This will increase to 40x30x20cm — an extra 5cm (two inches) along one side — a Ryanair spokeswoman said on Wednesday. Airlines' varying luggage-size requirements have long led to customer confusion and frustration, as some get charged extra at the gate if their bag is oversized. Members of the European Parliament, the EU's legislative body, have proposed requiring two free cabin bags. On Wednesday the airlines' trade body, Airlines for Europe (A4E), announced standards for the free under-seat bag that its members will roll out by the end of summer. The group, which includes Ryanair and network carriers like Deutsche Lufthansa AG, Air France-KLM and British Airways parent IAG SA, will adhere to minimum dimensions of 40x30x15cm, it said. EasyJet Plc said it will also exceed A4E's minimums by maintaining its free luggage allowances. This is the first time a framework has been set out for smaller bags that passengers can take onboard as part of the fare. A4E has objected to a two-bag minimum, saying such requirements strip passengers of choice and force services on them that they don't need. 'What's next? Mandatory popcorn and drinks as part of your cinema ticket?' Ourania Georgoutsakou, A4E's managing director, said in a June statement. - Bloomberg
Irish Times
4 hours ago
- Irish Times
US tariff receipts surge in Donald Trump's trade war
US tariff revenues surged almost fourfold from a year earlier to a record $24.2 billion (€20.55 billion) in May, the first full month in which US president Donald Trump's 10 per cent global tariff was in effect. The figure represented a rise of more than 25 per cent from the previous month, while the total value of US goods imports remained broadly unchanged from April. The figures suggest the president's trade war could provide a much-needed boost to the US government's coffers as Republicans in Congress secured passage of his flagship tax and spending bill. The bill, which extends vast tax cuts from Mr Trump's first administration but makes steep cuts to public healthcare for low-income Americans, is forecast to add $3.4 trillion to the US government deficit over the next decade. READ MORE But the data also underscored the potential for his aggressive tariff increases to distort global trade flows. Imports to the US from China fell to $19.3 billion, a 21 per cent drop from the previous month and 43 per cent down from the same month in 2024, reflecting a significant decline in trade between the world's two largest economies. Earlier this year, Mr Trump imposed new tariffs of 145 per cent on all Chinese goods before cutting the rate to 30 per cent after US officials held talks with their Chinese counterparts in London and Geneva. The slump in trade brought Chinese imports destined for domestic consumption to their lowest level in 19 years. The US leader has particularly targeted China as he seeks to reshape global trade, saying both that he wants to bring manufacturing back to the US and that the levies will raise money and make the country 'very rich'. Mr Trump has insisted that the revenues raised from tariffs can reduce reliance on income taxes. But despite the rise in sums collected, the receipts represented only about 7.7 per cent of May's federal deficit of $316 billion. The deficit figure oscillates from month to month, however. The sum raised in May was equivalent to about 14.5 per cent of the typical $166 billion shortfall between federal spending and revenues over the past year. Despite singling out China for the steepest tariffs, Mr Trump triggered a global stock market rout with April's so-called liberation day, when he unleashed tariffs of 10 per cent to 50 per cent on most US trading partners, before later temporarily lowering them to 10 per cent for 90 days. Since April 9, a baseline rate of 10 per cent has been applied on almost all goods imports. Certain products, including pharmaceuticals and semiconductors, are exempted but may face a separate tariff in future, while steel, aluminium and automobiles are charged a higher rate of 25 per cent to 50 per cent. If the 90-day pause expires as planned on July 9, the US is set to increase tariffs on dozens of countries without special agreements. Mr Trump has threatened the EU with a 50 per cent levy if a deal is not reached, while Vietnam has successfully negotiated a 20 per cent rate, down from the original 46 per cent the US had threatened to impose. The effective tariff rate, calculated as the average duty raised across all imports as a share of their value, increased to 8.8 per cent in May, its highest figure since 1946. For Chinese goods, the tariff rate reached a record 48 per cent. At the end of May, the US doubled steel and aluminium tariffs to 50 per cent and later expanded its definition to include steel derivative products such as freezers, dishwashers and washing machines. Analysis by Yale Budget Lab suggests that if the rates in place as of June 16 were to remain, with no further increase on July 9, the effective tariff rate would settle at about 15 per cent, even after accounting for changes in consumer behaviour. Taking into account various effects of the tariffs on the US economy, the think-tank projected that the current tariff policy would raise $2.2tn between 2025 and 2034, but thanks to reductions in tax revenue streams elsewhere, would result in net revenues of $1.8tn during those years. Although a large sum, it is significantly less than the $3.4 trillion forecast to be added to US federal debt over the same period by implementing Mr Trump's tax bill, according to estimates from the Congressional Budget Office. – Copyright The Financial Times Limited 2025
