The increasingly weak euro reached parity with the dollar today on investor fears of an economic recession and the energy crisis.
The exchange rate of the euro and the dollar has reached parity today for the first time in twenty years, since July 15, 2002, the last date on which the price of the common currency exceeded that of the “green ticket”, according to data from market.
According to Bloomberg data, The euro has reached parity with the dollar on Tuesday by depreciating 0.4% compared to yesterday’s close and 12.05% so far this year (it ended 2021 at $1,137).
Experts believe that the recent interest rate hikes by the US Federal Reserve (Fed) have strengthened the dollar and encouraged investors to take refuge in this currency, while the risk of recession and energy concerns driven by the war in Ukraine are weighing more and more on the eurozone.
The yen also continues to depreciate against the dollar
The Chinese currency is trading at 137 units, a level not seen since September 1998, as the Japanese central bank’s monetary policies distance themselves from the Fed or the European Central Bank (ECB).
The euro reached parity after reports that business confidence plummeted in July in Germany on concerns over energy supplies.
The possibility that China applies new confinements after the increase in covid-19 infections could weigh down the country’s and global economies.
In addition, investors anticipate a recession in the euro zone due to the energy crisis and the probability that Germany will enter negative growth due to its greater dependence on Russian gas.
As the European economy weakens, the Fed has been able to raise interest rates aggressively, thus strengthening the dollar because Washington offers higher rates.
