EURO Exchange rates

U.S. dollars per 1 euro 1999-2009

Year    Lowest ↓                Highest ↑

            Date      Rate        Date     Rate

1999    03 Dec   $1.0015    05 Jan    $1.1790

2000    26 Oct   $0.8252    06 Jan    $1.0388

2001    06 Jul     $0.8384    05 Jan    $0.9545

2002    28 Jan    $0.8578    31 Dec  $1.0487

2003    08 Jan    $1.0377    31 Dec  $1.2630

2004    14 May  $1.1802    28 Dec  $1.3633

2005    15 Nov  $1.1667    03 Jan    $1.3507

2006    02 Jan    $1.1826    05 Dec  $1.3331

2007    12 Jan    $1.2893    27 Nov  $1.4874

2008    27 Oct   $1.2460    15 Jul     $1.5990

2009    05 Mar   $1.2555    02 Jan    $1.3866

Source: Euro exchange rates in USD, ECB

 

Flexible exchange rates

The ECB targets interest rates rather than exchange rates and in general does not intervene on the foreign exchange rate markets, because of the implications of the Mundell-Fleming Model which suggest that a central bank cannot maintain interest rate and exchange rate targets simultaneously because increasing the money supply results in a depreciation of the currency. In the years following the Single European Act, the EU has liberalised its capital markets, and as the ECB has chosen monetary autonomy, the exchange rate regime of the euro is flexible, or floating. This explains why the exchange rate of the euro vis-à-vis other currencies is characterised by strong fluctuations. Most notable are the fluctuations of the euro versus the U.S. dollar, another free-floating currency. However this focus on the dollar-euro parity is partly subjective. It is taken as a reference because the euro competes with the dollar's role as reserve currency. The effect of this selective reference is misleading, as it gives observers the impression that a rise in the value of the euro versus the dollar is the effect of increased global strength of the euro, while it may be the effect of an intrinsic weakening of the dollar itself.

Against other major currencies

Exchange rate evolution of the euro compared to USD, JPY and GBP. Exchange rate at start is put to 1.

After the introduction of the euro, its exchange rate against other currencies fell heavily, especially against the U.S. dollar. From an introduction at US$1.18/€, the euro fell to a low of $0.8228/€ by 26 October 2000. After the appearance of the coins and notes on 1 January 2002 and the replacement of all national currencies, the euro then began steadily appreciating, and soon regained parity with the U.S. dollar, on 15 July 2002. Since December 2002, the euro has not again fallen below parity with the U.S. dollar but instead began ascendancy. On 23 May 2003, the euro surpassed its initial ($1.18) trading value for the first time. At the end of 2004, it reached $1.3668 (€0.7316/$) as the U.S. dollar fell against all major currencies. Against the U.S. dollar, the euro temporarily weakened in 2005, falling to $1.18 (€0.85/$) in July 2005, and was stable throughout the third quarter of 2005. In November 2005 the euro again began to rise steadily against the U.S. dollar, hitting one record high after another. On 15 July 2008, the euro rose to an all-time high of $1.5990 (€0.6254/$). In a reversal, in August 2008 the euro began to drop against the U.S. dollar. In just two weeks the euro fell from its peak to $1.48 and by late October it reached a two and a half year low below $1.25. On 29 December 2008, the pound sterling fell to an all-time low of £0.97855 (€1.0219/£) against the euro.

 

Currencies pegged to the euro

Worldwide use of the euro and the U.S. dollar: Eurozone External adopters of the euro Currencies pegged to the euro Currencies pegged to the euro within narrow band United States External adopters of the US dollar Currencies pegged to the US dollar Currencies pegged to the US dollar within narrow band

Several non-EU currencies that were pegged to a European currency are now pegged to the euro: the Cape Verdean escudo, the Bosnia and Herzegovina convertible mark, the CFP franc, the CFA franc and the Comorian franc.

In total, the euro is the official currency in 16 countries inside the European Union, and 5 countries/territories outside the European Union. Several other EU members will ultimately join the euro. In addition, 23 states and territories have currencies that are directly pegged to the euro including 14 countries in mainland Africa, 2 African island countries, 3 French Pacific territories and another Balkan country, Bosnia and Herzegovina.

Though the United Kingdom is not in the Eurozone, many high-street banks report that as much as 90% of their international trade is conducted in euro. It is common therefore for them to use the euro as their 'core' currency on international business systems, only converting to Sterling for local accountancy purposes.