The euro at its lowest since 2002 against the dollar

The euro sank below parity with the dollar on Monday, August 22, at a level not seen since the year it was put into circulation, weighed down by the energy crisis which threatens to plunge Europe into recession.

© Gregorio Borgia/AP

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Unheard of for 20 years, since 2002 and the introduction of the euro.

The single European currency is at its lowest against its major competitor, the dollar.

The energy crisis and the threat of a recession on the Old Continent are causing the markets to react.

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The euro sank below the parity threshold with the dollar on Monday, at a level more seen since the year it was put into circulation, weighed down by the energy crisis which threatens to plunge Europe into recession.

The greenback benefiting for its part from the successive tightening of the American Federal Reserve (Fed), the euro lost 0.96% around 3:30 p.m. UT to 0.9941 dollar, its lowest since 2002.

The strength of the dollar makes imports more expensive, especially for raw materials such as oil, which are priced in dollars, accentuating an inflation that is already devastating for consumers and businesses.

Gas giant Gazprom has warned that gas supplies will be halted for "

 " from August 31 to September 2, risking reigniting fears of

, where Russia is accused of energy blackmail.

The price of European gas soared again and reached 295 euros per megawatt hour (MWh) on Monday, approaching the historic records reached in the first days of the invasion of Ukraine by Russia.

Will Europeans be able to foot the bill?

In any case, the risk of a recession weighs down their currency, which is about to experience difficult times.

The Fed in better shape than the ECB

Especially since inflation is not weakening, which further complicates the task of the European Central Bank (ECB), obliged in order not to seize up the machine to raise its interest rates.

On the other side of the Atlantic, despite a slight weakening in US inflation in July, the US Federal Reserve (Fed) assures us that it will continue to tighten its monetary policy.

The US economy is less affected than Europe by the war in Ukraine, so the Fed has more leeway to act than the central banks of the Old Continent.

Investors are eagerly awaiting the annual meeting of central banks in Jackson Hole in the United States, scheduled for Friday, August 26.

►Also read: The parity between the euro and the dollar could also affect Africa

(

AFP)

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