The euro has been falling since last Tuesday under the cumulative effect of recession fears (Getty)
value fell euroToday, Tuesday, it reached one dollar, at a level not recorded since a year ago, when the single currency was introduced into circulation twenty years ago, in light of the risks arising from a supply cut. Russian gas on the European economy.
The value of the euro reached one dollar at regarding 09:50 GMT for a brief period, in the first since December 2002, before rising once more slightly.
The euro has been declining since last Tuesday, “under the cumulative effect of fears of recession in Europe and financial fluctuations resulting from a new rise in energy prices in the region,” especially gas and electricity prices, as explained by Guillaume Dejan, an analyst at Western Union, in previous statements to the agency. Archyde.com”.
Stephen Innes, an analyst with SPI Asset Management, said the hypothesis of an overall supply cut would “reinforce the already high stagflation in Europe”.
Higher energy prices contribute to higher inflation, while pushing the eurozone economy into recession or even contraction. The slow growth leaves little room for the European Central Bank to raise interest rates.
Ulrich Leuchtemann, an analyst at Commerzbank Group, told the same agency that the US Federal Reserve might revive the economy by easing its monetary policy while the Europeans struggle to make up for their gas shortage. “It makes sense that the US dollar would be the biggest winner in this situation,” the same analyst added.
In addition, Kate Jukes, an analyst at Societe Generale, said that the ECB’s “credibility has been eroded” by its “exaggerated reaction” to the increase in the differential in lending rates in eurozone member countries, stressing that the euro is a currency that is “impossible to buy”. this summer.
He added that the currency was “totally unattractive to the point that a major political crisis would not even allow the euro to appreciate once morest the pound” sterling.
The depreciation of the euro, along with accelerating inflation, is expected to encourage the European Central Bank to raise interest rates faster. He is preparing to lift it in July, a first for eleven years.
For his part, the economist at BNP Paribas, William de Vigelder, told AFP that “the European Central Bank should not respond to the rise in commodity prices, but the challenge of restoring inflation control becomes greater because Import prices are rising due to the appreciation of the exchange rate.
The Central Bank of France considered, at the end of May, that the weakness of the euro, may hinder the efforts of the European Central Bank to control inflation.
(AFP, Archyde.com)