Euro falls sharply against dollar

The euro has weakened significantly against the dollar in recent days. The euro-dollar exchange rate fell on Monday to the lowest level since May 2025. The euro fell on Monday morning to about $1.116 per euro. In mid-August, the currency was still trading around $1.17 and at the beginning of this year it nearly reached $1.20. In a relatively short time, the euro has therefore given up a lot of ground and moreover chosen a different course than banks had often thought. The euro is not only losing ground against the dollar. The currency has also weakened against the British pound and the Swiss franc. France and Spain An important cause is the growing concern about French public finances. French government debt now amounts to about 119% of gross domestic product. At the same time, financing costs have risen. The interest rate on French government bonds with a maturity of ten years has risen to around 5%. The French government wants to reduce the budget deficit to 5% of GDP in 2027. To achieve that goal, according to the current plans, about €54 billion must be found. However, the financial markets doubt the political feasibility of this. This is visible, among other things, in the sharply increased interest rate difference between French and German government bonds. Political uncertainty in Spain is also giving the euro little support. Prime Minister Pedro Sánchez has called early parliamentary elections for 29 November, after his government last week failed to get two proposals on tackling the housing crisis through parliament. Favorable for agro-export For European agricultural trade, the development is relevant. A weaker euro can strengthen the price competitiveness of European exporters in markets outside the eurozone. On the other hand, products and raw materials purchased in dollars or other currencies become more expensive for European buyers.