British Pound, Japanese Yen and Euro Exchange Rates Plunge

The euro is rapidly approaching a 20-year low against the dollar after gas and electricity prices in continental Europe soared this week as foreign exchange traders worry that the European economy could be completely crushed once Russia completely shuts off gas supplies to Europe for heating homes, keeping lights on and factories running.

On July 5, the euro shocked to the downside, falling 1.8% on the day to a new low since December 2002. The euro fell about 10 percent against the dollar from its peak this year, and the sharp depreciation of the euro has reignited speculation that the euro may fall to parity against the dollar. Bloomberg quoted the head of Japan's Mizuho Bank foreign exchange sales department as saying, "(The euro and dollar exchange rate) flat is only a matter of time."

Also plunging is the British pound. The pound has now fallen to the lows set in 2020 when the outbreak hit. Affected by domestic and international issues, the pound has fallen 12 percent against the dollar so far this year. A growing number of investors believe that the pound may also fall to the 1985 level, that is, 1.10.

And the yen has fallen to a 50-year low. The yen has fallen about 17% in the first half of this year, on top of a sharp 11.42% depreciation against the dollar last year. According to JPMorgan Chase's head of foreign exchange strategy in Japan, "the yen is at its lowest level since the 1970s relative to a broader basket of currencies."

Many imported goods in the Japanese market have raised their selling prices as the yen's depreciation has sharply compressed the profits of products sold in the local market, for example, Apple has raised the prices of its main products such as cell phones, tablets and smart watches in Japan since this month, with cell phones rising by up to about 20%.

According to a survey conducted on July 1-6, for foreign exchange analysts, the dollar is expected to remain strong for at least the next three months due to the Fed's aggressive rate hike expectations and global investors' pursuit of safe-haven assets.