The declining euro could worsen inflation so the ECB should push rates higher, German finance minister says

German Finance Minister Christian Lindner urged the European Central Bank to raise rates to strengthen the currency.

The euro is close to reaching parity with the dollar for the first time in 20 years as the Federal Reserve lifts rates while the European Central Bank does not.

Lindner told reporters on Friday that inflation risks in Europe emerge from the development of the euro's external value. Europe desperately needs future economic development that is threatened by inflation.

A weaker currency makes imports more expensive and adds to inflationary pressures.

Key interest rates have been kept negative by the European Central Bank. The governor of Germany's central bank suggested that the European Central Bank could raise rates by as much as half a percentage point in July.

Lindner threw his full support behind the move, and said that more steps will follow.

In the early years, the euro traded below the dollar. The euro reached a peak of roughly $1.58 in March 2008.

Easy-money policies from the Federal Reserve helped keep the euro above the dollar. The Fed hiked rates by 0.75 basis points, and expectations for an aggressive cycle of continued increases have sent US bond yields surging.

The dollar has risen against the euro as well as the other top currencies. Russia's war on Ukraine as well as broader market turmoil have sent investors flocking to the safe haven of the dollar. Expectations for aggressive rate hikes by the European Central Bank are being hampered by a weakened eurozone economy.