11Onze Business and the depreciation of the euro
The euro has depreciated by 15% in the last year, trading at lows not seen in two decades. This intensifies inflationary pressure and makes costs more expensive for many Catalan businesses that operate internationally. With 11Onze Business your business will have a multi-currency account that allows you to protect your money against the euro’s plunge.
The Purchasing Managers’ Index (PMI), a macroeconomic indicator to measure where the European economy is moving, indicates that concerns about the current economic situation continue to grow, and business confidence is falling to levels seen in the midst of the health crisis.
Even so, the PMI points out that the diminishing business activity makes it inevitable that the eurozone will enter a recession. An economic slowdown that seems unstoppable given the complicated geopolitical situation. This fear of economic recession, spurred by central banks raising interest rates to combat inflation, is eroding the value of the euro against more stable currencies such as the dollar.
At the same time, sabotage of the North Stream 1 and 2 pipelines has dashed any hopes of alleviating the energy crisis by renegotiating trade ties with Russia. Thus, removing the only ace up Europe’s sleeve to cope with the unstoppable rise in the price of liquefied gas imported from the United States, thereby further destabilising the European economy and the value of the euro.
Diversifying currencies in the face of the falling euro
In this context, the euro’s weakness has been reinforced by the unusually strong dollar, with the European currency trading below the dollar. Even so, the Federal Reserve may well have no choice but to continue raising interest rates to control inflation and, as a consequence, weaken other currencies.
Although the fall in the value of the euro against the dollar benefits some businesses’ exports, offering the opportunity to expand into other markets, Europe’s heavy dependence on dollar-denominated hydrocarbons has pushed up the value of energy imports, aggravating the eurozone’s trade deficit.
At a time of rising exchange rates, businesses with money or investments in foreign currencies can benefit. The 11Onze Business account gives you access to the Forex market, as well as the option to open multi-currency subaccounts to diversify the nominal exchange rate risk between two or more currencies.
For example, if we had exchanged 10,000 euros for dollars in January, we would have obtained 11,298 dollars. And now, these dollars have gone up in price, so if we exchanged them back now we would get €11,568. 10,000 would have become €11,568, giving an increase of 15.68%. Therefore, we would achieve double protection: against the decline of the euro against the dollar, and against the 9.1% loss in value caused by the prevailing inflation.
The 11Onze Business account allows you to operate in a simple and intuitive way with 28 currencies around the world, thus avoiding having your money tied up in euros. This makes it easy for you to send money at a very competitive exchange rate, with no hidden fees, and with real-time visibility of payments opened by the business.
If you want your business to make a giant leap, use 11Onze Business. Our business and freelancer account is now available. Find out more!
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