The longer the war lasts, the worse the euro and the European economy will be

(Patria) - The euro continues its decline against the dollar, reaching its lowest value. The value of the euro is currently almost equal to the value of the US dollar. Although the stability of the European currency is in its most difficult situation in the last 20 years, and the standard of living is falling unstoppably, in Croatia, the euro will be the official currency from next year, while the kuna will become a thing of the past. All of this could also affect the stability of the convertible mark, which is fixed to the euro. We checked how much.

Although the euro celebrated its 20th anniversary this year, there is no reason to celebrate, as the European currency is not in a great position. Currently, 1 dollar is 0.99 euros, which is its weakest position ever. Experts warn that the decline in the value of the euro also means a decline in the value of the convertible mark, which is backed by euros. This means that the money in citizens' wallets is worth less and less. There are several reasons for this. The war in Ukraine and the global economic crisis are at the forefront of the list of causes for the decline in the value of this currency. While some are profiting, there is no good news for others.

"Only America is financially profiting from the war in Ukraine; everyone else is losing, especially Europe. The longer the war lasts, the worse the euro and the European economy will be. Every convertible mark of ours is backed by euros, and the ECB has been issuing euros without coverage for 15 years, thereby indirectly weakening our mark," says Berislav Kutle, director of the Association of Banks of BiH.

The data best confirms how negatively the rise of the dollar is affecting and weakening the convertible mark. Last year, for a debt of 1,000 dollars, BiH had to repay 1,590 convertible marks without interest. Today, for the same amount, our country has to repay 1,930 convertible marks, also without interest. However, the Central Bank of BiH, according to previously forwarded data, points out that the convertible mark is stable and monetary stability is ensured.

While the standard of living is falling more and more, and the euro is recording a lower and lower value, Croatia has become the 20th country to join the eurozone. From next year, the official currency in the neighboring country will be the euro, and the kuna will be a currency of the past. BiH should not feel a significant difference and consequences. According to experts, there is no reason for concern.

"No shock is expected due to the change in the exchange rate in international trade between our country and Croatia. It should be said that the ten-year exchange rate, from 2010 to 2021, between the KM and the kuna has been relatively stable, and after the introduction of the euro, this exchange rate will be further fixed," states Jasmin Halebić, professor at the Faculty of Economics of UNZE.

Although there is no reason for shock, our country will not avoid numerous consequences of the decreasing value of the euro, on which the BiH currency depends. The largest part of BiH's foreign debt is precisely in the European currency. However, the increase in debt should not pose a problem, as due to inflation, budget revenues are at a record high, reports Federalna.ba.