The fierce fight between the euro and the dollar can affect prices: the energy sector is particularly singled out

The fight between the euro and the dollar is intensifying and the dollar is getting stronger in relation to the euro. This is not the best news for residents. There is a high probability that the changing exchange rate will be felt most by drivers. Even now, many people complain about high fuel prices.

“It’s expensive and it’s going to get more expensive,” remarked one of them.

“I will not fill it full. According to the prices, about 20 euros, certainly not more. 20 euros – 13 liters,” said the man interviewed at the gas station.

“Gasoline is more expensive, but I don’t drive very much, so I am satisfied with the price. What can I change?’, wondered another.

Lithuanian gas stations assure that the rising dollar has not yet raised fuel prices. They are said to have arisen only because of the change in excise duty, but the situation can turn upside down at any time.

“We cannot predict what one or the other country is thinking,” said Vidas Šukys, Executive Director of the Union of Lithuanian Gas Stations.

On April 22, 1 euro was worth about 1.06 dollars. This is the highest result in 6 months, and with every increase in dollar, there is a risk that fuel, heating, and food will be more expensive for residents. However, some economists do not doubt that the peak of the dollar’s appreciation is already in the past.

“If we don’t see any surprises, let’s say an escalation of geopolitical risks or another change in interest forecasts, it is likely that the exchange rate of the euro against the dollar will remain at the current level,” said Alexander Izgorodin.

It is true that other economists emphasize that America on the other side of the Atlantic should not be forgotten. After the meeting of the European Central Bank held in April, the question arose – should Europe not be worried that the recent increase in inflation in America could hinder inflation mitigation plans in Europe? This possibility worries some analysts.

“About 50 percent we import liquefied gas precisely from America and those contracts are denominated in dollars. Therefore, everything, all energy resource contracts denominated in dollars – they would become more expensive when imported to Europe”, noted the economist-analyst of the Confederation of Industrialists, Eglė Stonkutė.

However, in mid-April, the European Central Bank did not pay attention to the American plans and kept to its essential position – to reduce inflation.

“We are determined to ensure that inflation returns to our 2 percent in time.” medium term objective. We believe that the European Central Bank’s key interest rates are at a level that is contributing significantly to the ongoing disinflation process. Our future decisions will ensure that interest rates will be sufficient,” said Christine Lagarde, head of the European Central Bank.

The European Central Bank promises further decisions at the next meeting, which will be held at the beginning of June, but will those decisions not cause chaos in Europe?

“The relationship between the dollar exchange rate and our humanitarian policy decisions can start to create serious problems. First of all, in the energy sector. I have already mentioned somewhere that maybe we are not waiting for something so terrible, but some kind of next wave of energy crisis”, said E. Stonkutė.

Other economists are against it, saying that a dollar that is expensive for residents can also bring benefits.

“There are strong trends in the Lithuanian economy, export recovery. Exports make up the largest part of Lithuania’s economy, and the fall of the euro is very favorable for the euro zone’s exports,” said A. Izgorodinas.

It is believed that as the dollar strengthens, American consumption will increase, so exports from Europe can only increase. Americans may even start planning vacations in cheaper Europe.