Euro hits US dollar parity for first time in 20 years
The euro was at a low of $1 as of 10:00 GMT on Tuesday and stock markets fell as potential central bank tightening and concerns about the health of worldwide economies made investors uneasy. The euro is the weakest it’s value has been in over 20 years.
The US currency has reached two decade highs against multiple currencies in the past few weeks. The euro, however, has been very vulnerable due to natural gas prices and its effect on regional economies, and the war in Ukraine. The European Central Bank has also been behind in raising interest rates. SG Futures says this is a severe problem for the EU as energy imports may still become more expensive. The biggest pipeline carrying Russian gas to Germany began annual maintenance on Monday and flows are expected to resume in 10 days, however, there are concerns that gas supplies will not resume on July 21 first due the tensions between Europe and Russia. This would potentially speed a recession and exacerbate Europe’s energy supply crunch.