What does Dollar-Euro parity mean for the superyacht industry?
Given the current strength of the Dollar, Americans could look to snap up European superyachts on the cheap…
The Euro reached a 20-year low at the start of July, and it doesn’t look like it will be getting much stronger any time soon. Since the beginning of 2022, the Euro’s value compared to the dollar has decreased by more than nine per cent, and with the Euro nearing the value of the dollar, the almost one-to-one ratio may provide an extremely rare and beneficial opportunity to those in the market for a superyacht.
There are many external influences affecting the exchange rate at the moment. But put simply, the reason for the current situation is down to the fact that the US has become something of a safe haven for global investors. The Federal Reserve has managed to curb inflation for everyday Americans by making imports cheaper and increasing interest rates for the first time since the pandemic. At the same time, the war in Ukraine is causing a massive strain on European economies. Therefore, in the eyes of an investor, America is the safest bet considering the state of the rest of the world right now.
In regards to the superyacht industry, this means that American yacht buyers can save a lot of money when buying a superyacht priced in Euros. It means that buyers purchasing a yacht with US dollars can get a lot more bang for their buck. For instance, a superyacht with a sticker price of €10,000,000—so, possibly valuing in at around $11,094,020 six months ago—is now only $10,073,000. The more expensive the yacht, the more the relative savings will be as a result of the exchange rate.
The record low euro-to-dollar ratio affects the superyacht charter sector, as well. Just as with the purchase of a yacht, paying for a yacht charter in Euros can mean huge savings. With many charters currently stationed in the Mediterranean for the summer months, now is a perfect time to take advantage of the situation.
Given the recent exodus of Russian clients from the market, now could be an especially prosperous period for the Italian New Build sector specifically. The Superyacht Group recently visited the major superyacht hubs in and around Tuscany to gain insight into the current state of the market given the recent sanction fallout. The Italian yacht building industry, which is responsible for having built roughly 30 per cent of the current superyacht fleet, not only claims to be relatively unaffected by Russian sanctions, but to be thriving with order books full of American clients.
Currency markets are extremely difficult to predict, especially at a time like this. It appears the US will most probably plunge into a recession by the end of the year, and that the war in Ukraine will most likely transition into a long war - but nothing can be predicted with any degree of certainty. While that uncertainty will remain, the current unprecedented parity between the two currencies entitles EU businesses operating in the new build, charter, and refit sector the right to start getting a little bit excited about the final two quarters of the year.
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