Euro surges after Europe's rearmament announcement

DNVN - Since March 1, the euro has recorded a 5% increase in value, currently reaching 1.09 USD to 1 euro. At the same time, the Swedish krona has increased by 7% against the USD, while the Polish zloty has also recorded a 5% increase.

The main factor driving this increase comes from investors' expectations of increased military spending in Europe, along with concerns related to the risk of economic recession in the US.

A VNA reporter in Paris said that not only the euro but many other currencies in the EU also increased in value after the European Commission announced the plan to "re-arm Europe". According to this plan, about 800 billion euros can be mobilized within the next 4 years, creating an optimistic sentiment in the financial market.

“Central European currencies have benefited from the positive impact on European economic growth over the past week” following the defense investment announcements, said analyst Lee Hardman from financial group MUFG.

“European countries, especially Germany, have loosened fiscal policy, which has helped the EU currency appreciate on expectations of stronger growth,” said Swissquote expert Ipek Ozkardeskaya.

In Poland alone, the government's announcement in August 2024 of a plan to increase defense spending to 4.7% of GDP by 2025, an increase of 0.6 percentage points compared to 2024, is considered an important supporting factor helping the zloty appreciate.

Notably, the Swedish krona has even outperformed the euro and zloty. “Sweden has a number of large defense companies, so the krona could continue to appreciate as more investment is made in the sector,” said Commerzbank analyst Michael Pfister.

In addition to the European rearmament factor, developments in the US also significantly affected the upward trend of the euro. Mr. Lee Hardman commented: "The statements of former President Donald Trump about the transition period of the US economy, along with the plan to increase taxes in the coming months, increased the market's concerns."

Concerns about “stagflation” – a state of slow economic growth combined with high inflation – are turning into fears of a recession in the US, putting downward pressure on the dollar. This week, US stock indexes all fell, with the Dow Jones Industrial Average down 2%, the S&P 500 down 2.7%, and the Nasdaq down 4%. Technology stocks were particularly hard hit, with Nvidia shares down 5%.

“The political uncertainty in the White House is giving European stocks an advantage,” said Ipek Ozkardeskaya, adding that European stocks have become more attractive as investors seek to avoid risks from the US. The STOXX 600 Europe index has risen 6.55% since January 1, adding to the upward momentum of the euro and many other European currencies.

Thanh Mai (t/h)

Source: https://doanhnghiepvn.vn/kinh-te/dong-euro-tang-manh-sau-tuyen-bo-tai-vu-trang-tu-chau-au/20250312111921343