Posted in: 23/08/2022 – 21:14
The euro exchange rate fell on Tuesday to its lowest level in two decades against the US dollar after weak economic data raised fears of a recession in the midst of the energy resource crisis. European stocks fell on the back of great fears that the US Federal Reserve will continue its policy of raising interest rates to combat inflation.
In the midst of fears of the impact of the energy resource crisis on European economies, the exchange rate of euro Tuesday to its lowest level in two decades against the US dollar.
The euro exchange rate fell to $0.9901, but returned and compensated for its losses, recording $1,006 at 15:30 GMT, after data showed weak results for the US economy.
The level of $0.9901 for the euro exchange rate is the lowest ever since December 2002, the year in which the single European currency began trading.
On Monday, the euro briefly fell below the threshold of parity with the dollar, with the energy crisis threatening a recession in Europe.
The index of private sector activity in the euro area fell to 49.2 points in August, the lowest level in 18 months, indicating a contraction in activity.
For his part, warned Jack Allen Reynolds, an analyst at the “Capital Economics” Center for economic research, “These figures confirm the scenario we put forward regarding the necessary tightening of the European Central Bank’s policy at a time when the economy enters a recession.”
The performance of the British pound against the dollar was better, as it recorded its price of 1.1855 at 15:30 GMT, the British PMI remained above 50 points in August.
Difficulties against the Canadian and Australian dollars
The two currencies fell for several sessions after announcing the suspension of Russian gas deliveries via the Nord Stream 1 gas pipeline between August 31 and September 2.
European stocks fell on the back of great fears that the US Federal Reserve will continue its policy of raising interest rates to combat inflation.
But European natural gas prices fell on Tuesday, knowing that they are still near their highest levels, amid fears of a halt in Russian gas supplies.
“Faced with the threat of shortages threatening Europe this winter, we are seeing price sensitivity to any bad news,” said Guillaume Duggan, analyst at Western Union.
He notes that the euro is also facing difficulty against the Australian and Canadian dollars, in addition to being at their lowest levels against the Swiss franc since 2015.
The questions now revolve around the level to which the euro can fall.
“The strength of the dollar depends in part on the idea that the US Federal Reserve will issue a message on tight monetary policy at the Jackson Hole Forum” where central bank governors meet at the end of the week, notes Lee Hardman, an analyst with the Japanese banking group Mitsubishi Financial Group.
FRANCE 24/AFP