An energy crisis caused by Russia’s invasion of Ukraine is largely to blame for the euro’s fall below parity with the dollar for the first time in 20 years, analysts say.
“The euro’s slide underlines the foreboding in the 19 European countries using the currency as they struggle with an energy crisis caused by Russia’s war in Ukraine,” per a PBS article.
Fears that the war will result in a loss of Russian oil exports have pushed up oil prices, and Moscow has cut back on natural gas supplies to the European Union to retaliate against sweeping sanctions over its assault on Ukraine.
‘Think again’
Inflation in the euro area rose to a record high of 8.9% in July.
The European currency touched its all-time high of $1.18 shortly after its 1999 launch. It slid to its lowest level of 82.30 cents in October 2000 before rising above parity with the dollar in 2002.
“If you think Euro at parity is cheap, think again,” economist Robin Brooks tweeted. “German manufacturing lost access to cheap Russian energy & thus its competitive edge.”
“Global recession is coming,” he warned.