1.00 Euro = 1.0052 US Dollar! Currency plunges to lowest level in 20 years

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Ongoing fears of an energy crisis in Europe are causing the single currency to fall to its lowest level in 20 years. On Monday afternoon, one euro cost 1.0053 U.S. dollars – thus the euro just reached the euro-dollar parity.

Source: focus.de

1.00 Euro = 1.0052 US Dollar! Currency plunges to lowest level in 20 years 1

The euro exchange rate reached its lowest level in 20 years at the start of the week. On Monday afternoon, the common currency cost a low of 1.0053 U.S. dollars. Most recently, the single currency reached its lowest level since the end of 2002 on Friday at 1.0072 dollars. This means that the exchange rate is only just above the euro-dollar parity. This is understood to mean an exchange ratio of one to one. The European Central Bank (ECB) set the reference rate at 1.0098 (Friday: 1.0163) dollars. The dollar thus cost 0.9903 (0.9840) euros.

1.00 Euro = 1.0052 US Dollar! Currency plunges to lowest level in 20 years 2

Fear of energy crisis fuels free fall of the euro

A major reason for the euro’s weakness is fear of an energy crisis in Europe. On Monday, the maintenance shutdown of the Nord Stream 1 gas pipeline began. “The danger of an energy crisis in Europe is the sword of Damocles that hovers over the euro exchange rates and weighs on them,” said foreign exchange expert Ulrich Leuchtmann of Commerzbank. In his view, there can be little relief before the end of the pipeline maintenance work, which usually lasts ten days. And every day that the maintenance work lasts longer than planned could further burden the euro, Leuchtmann warned.

Dollar currently strong, euro weak – also due to interest rate decisions

In addition, dollar strength also put pressure on the euro. On the market, the focus is on new inflation data from the U.S., which is expected on Wednesday. A further increase in the inflation rate to 8.8 percent is expected for June. According to experts, this would point to a significant interest rate hike of 0.75 percentage points by the U.S. Federal Reserve this month. The prospect of further sharply rising interest rates in the U.S., while the interest rate turnaround in the euro zone is not expected until July, provides a boost to the dollar and weighs on the euro.

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On other major currencies, the ECB set reference rates for one euro at 0.84540 (0.84585) British pound, 138.77 (138.05) Japanese yen and 0.9908 (0.9913) Swiss franc. The troy ounce of gold was trading at $1738 in London this afternoon. That was about four dollars less than on Friday


Salih Demir

Salih Demir lives in Germany. He is interested in politics and economy. Germany editor of -ancient idea- fikrikadim.com