The euro briefly falls beneath parity in opposition to the greenback

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The euro briefly falls beneath parity in opposition to the greenback

Weighed down by the power disaster which threatens to plunge Europe into recession, the euro sank, on Monday August 22, beneath the edge of parity with the greenback, to a stage which had not been seen for the reason that 12 months of its launch.

The dollar benefiting, for its half, from the successive tightening of the American Federal Reserve (Fed), the euro misplaced 0.96% round 5:30 p.m. (Paris time), to 0.9941 greenback, a lowest since 2002. The one foreign money had already fallen beneath parity for the primary time in mid-July.

The power of the greenback makes imports costlier, particularly for uncooked supplies similar to oil, the worth of which is fastened in {dollars}, accentuating an inflation that’s already devastating for shoppers and companies.

Learn additionally: Article reserved for our subscribers How the autumn of the euro in opposition to the greenback is fueling inflation

Worry of a gasoline scarcity

The introduced closure, for upkeep, of the Nord Stream 1 gasoline pipeline, which provides the majority of Russian gasoline to Europe, between August 31 and September 2, has additional accentuated fears of shortages on the Outdated Continent and boosted the pure gasoline costs in Europe. Because of this, the worth of European gasoline (Dutch TTF futures contract) soared once more and reached 295 euros per megawatt hour on Monday, approaching the historic data reached within the first days of the invasion of Ukraine by Russia.

And the week might be painful for the euro. For the second, in 2022, the foreign money had recovered after having flirted with the edge of parity, however “poor PMI indicators [purchasing managers index, l’indice des directeurs d’achat] Tuesday might be sufficient to anchor the euro underneath 1 greenback”, informed AFP Package Juckes, an analyst at Société Générale. As a result of, on the opposite facet of the Atlantic, regardless of a slight weakening of US inflation in July, the US Federal Reserve (Fed) ensures that it’ll proceed to tighten its financial coverage.

Learn additionally Article reserved for our subscribers Worry of Russian oil embargo causes monetary panic, inventory markets fall

The UK additionally caught within the disaster

Whereas the American financial system is much less affected than Europe by the battle in Ukraine, the Fed has extra leeway to behave than the central banks of the Outdated Continent. Thus, the pound sterling has additionally returned to its 2022 low. “It has been a foul 12 months for the pound, which is even falling in opposition to the euro, whereas the Financial institution of England has raised its charges at every assembly [depuis la fin de 2021] »remind OFX analysts.

Regardless of these will increase, British inflation exceeds 10% over one 12 months and is the best among the many G7 international locations, because of the battle in Ukraine, the aftermath of the pandemic, but in addition Brexit, which is tightening the labor market. and additional disrupt UK provide chains.

At 1.1764 {dollars} to 1 pound, the British foreign money is at its lowest for the reason that begin of 2020 and the primary months of the pandemic. Previous to that, the pound sterling had not fallen beneath $1.18 since 1985.

The World with AFP

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