WILLEMSTAD - The recent rise of the euro to its highest level in three months has direct consequences for Curaçao and Aruba, countries whose currencies are pegged to the US dollar. The European currency reached a peak of 1.0936 dollars on Monday morning, indicating a weakening of the dollar.
This development is due to speculations that the US Federal Reserve (Fed) could cut interest rates in 2024 to limit economic damage from previous increases.
The change in the exchange rate can have economic implications for Curaçao and Aruba. Local analysts warn that a strong euro may increase the costs of European goods and services, putting pressure on both consumers and businesses on the islands.
Conversely, the stronger euro leads to increased purchasing power for tourists from the Eurozone traveling to the islands, as their euro is now worth more in dollars, potentially leading to more spending on the islands.
Island residents with a dollar-pegged currency traveling to Europe will find that their money is worth less. This means that their vacation or family visit may become more expensive as they spend more local currency for the same amount of euros. This can particularly affect the costs of accommodation, food, transportation, and other expenses during their stay in Europe.