Euro sinks to parity with Dollar for first time in 20 years
London, July 12: The euro on Tuesday declined to reach parity with the dollar for the first time in the last 20 years.
The development indicates the market's assumption that the European economy is heading for a deep recession as a result of the Russia-Ukraine war.
With this change, European companies and consumers will pay more for the goods and services they import while seeing an immediate decrease in the price of European exports on global markets.
Notably, the value of the euro has dropped dramatically since early February when it was worth over $1.13.
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The slump picked up speed in recent weeks after speculations that Russia, the EU's main energy provider, is likely to cut off gas flows in retaliation for Western sanctions. 12 EU nations have so far experienced a complete or partial reduction in Russian gas.
Earlier this week, the supplies from the Nord Stream 1 pipeline were suspended for a planned 10-day maintenance. It is however uncertain if the Kremlin will order the suspension to continue beyond that deadline and become indefinite.
Meanwhile, all eyes will be on the euro to see if it ends up dropping below the US dollar. The last time this happened was in November 2002, when the euro was valued at $0.99.
Since then, the euro has risen steadily, hitting almost $1.60 in the summer of 2008, when the US was experiencing the worst financial disaster since the Great Depression.
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-PTC News
