European reports warned that the uncertainty related to the possibility of tightening sanctions against Russia and its impact on the European economy, may lead to more pressure on the euro, which is already in a bad situation.
A report published by the German newspaper Deutsche Wirtschafts said that the European currency is now in “free descent”, and its exchange rate against the US dollar has reached its lowest level since 2017.
According to analysts at the German “Bayern Landesbank”, the dollar will continue to rise as the US Federal Reserve plans to raise interest rates to combat high inflation.
Amid the uncertainty associated with the possibility of tightening sanctions against Russia and its impact on the European economy in putting pressure on the euro, experts believe that Europe will suffer from the economic consequences of the Ukrainian crisis more than the United States.
Additionally, according to VP Bank’s chief economist, Thomas Getsela, the euro cannot benefit from three rate hikes planned by the European Central Bank this year.
“In the currency markets, there are great fears of a strong economic slowdown in the eurozone, or even a recession,” Getsella said, warning that stagnation, high inflation and the inability or unwillingness of the European Central Bank to act, would be the “worst case scenario possible.”
It should be noted that Gitsella had previously warned that the instability of the euro could prompt citizens to search for an alternative to the official currency, and predicted that the European Union would witness long-term inflation that could “kill the euro”.
Source: Russia’s RIA Novosti Agency