The euro fell to a twenty-year low against the dollar amid another surge in natural gas prices and the threat of a recession, according to the Daily Mail.
Edition writes that European industry is facing an unprecedented energy shortage, undermining the competitiveness of the Eurozone and European exports.
To date, the euro exchange rate against the dollar is 1:1.01. For comparison: at the beginning of the year, this figure was 1:1.14. No better behave and other currencies – reported on the fall of the Japanese yen and the British pound against the dollar.
The fall of the single European currency to 1.0145 against the US dollar is a new 20-year low. Experts explain the decrease by almost 11% simply: fears that Russia will stifle gas supplies are fueling recession expectations. Economists at Pantheon Macroeconomics note:
“Eurozone economy shows resilience, but winter is coming. The war in Ukraine started when the virus-related restrictions were lifted, which caused huge uncertainty, just at the moment when we hoped that the economy was about to warm up.”
The report says there is now clear evidence that soaring inflation, which reached a record 8.6% in June, is eroding the economy’s purchasing power. Carsten Brzeski, head of global macro at ING Bank, says the impact of job shortages interrupting flights and trains and inflation are holding back new investment and industrial orders.
The economists’ warning came as the US currency was bolstered by a series of sharp interest rate hikes by the Federal Reserve. The European Central Bank has not taken such action. Dirk Schumacher, head of European macroeconomic research at Natixis CIB, notes:
“Euro weakness reinforces the perception that the ECB is lagging behind.”