The Euro tumbled to a 20-year low against the Dollar this week, reaching almost parity with the US currency after Russia renewed its threat to turn off the gas supply to Europe.
The resurgence of Russia’s threat has sparked fresh fears of a European recession, with a single Euro equating to $1.0003 in morning trading.
The Euro has fallen 12% against the Dollar in the year-to-date, with the currency also falling on expectations of higher rate hikes by the US Federal Reserve this week, raising the strength of the Dollar.
“Russia’s renewed threat to turn off the gas to Europe has sent the euro tumbling to a 20-year low against the dollar, near parity with its US counterpart, and will only increase the importance of European producers,” said AJ Bell financial analyst Danni Hewson.
The market has voiced concerns that the suspension of the Nord Stream 1 pipeline, which was designed to transport natural gas from Russia to Europe, might become permanent and shut down the supply of vital gas to the continent.
The Pound Sterling also fell against the Dollar to £1 against $1.185, the lowest level since March 2020, after the upheaval left in Boris Johnson’s resignation saw the market struggle under the weight of political uncertainty.