For the first time in 20 years, the euro and the dollar are tied, indicating that the market believes that the Russian invasion of Ukraine will cause a severe downturn in the European economy. Currently, 1 euro is equal to 1 US dollar. With the change, European businesses and consumers will pay more for the goods and services they import, while seeing an immediate drop in the price of European exports on global markets.
Since early February, when it was above $1.13, the value of the euro has fallen dramatically. Fears that Russia, the main energy supplier to the EU, will completely cut off gas supplies in response to Western sanctions have caused the decline to increase in recent weeks.
So far, 12 European Union countries have experienced a full or partial decline in Russian gas.
"Let's prepare for a total cutoff of Russian gas. This is now the most likely option," said Bruno Le Maire, France's finance minister.
The Euro will be closely monitored to see if it manages to overcome the value of the US Dollar. The last time something similar happened was in November 2002, when the euro was valued at $0.99.
The European Central Bank has already raised interest rates in an attempt to curb inflation, and it plans to do so again in the future if things continue to deteriorate.
Source: ëion Neës
