A screen of a currency exchange office shows the foreign exchange as pedestrians walk at Omonia square in Athens, Greece, Wednesday, July 13, 2022. The euro on Tuesday fell to parity with the dollar for the first time in nearly 20 years. AP
Stock prices on Wall Street fell at the open after a pick-up in US inflation to 9.1 percent in June increased the risk of a possible recession.
European stock markets were also sharply lower by mid-afternoon, with London's blue-chip FTSE-100 index down 0.7 percent, Frankfurt's DAX down 1.4 percent and Paris's CAC-40 down 1.1 percent.
The euro fell below the symbolic level of $1.00 for the first time since December 2002, dipping as low as $.0998, as the prospect of higher interest rates rendered the dollar more attractive to investors.
The economic prospects for the 19-country eurozone are also darkening as a possible halt to Russian gas supplies increases the risk of recession.
Europe gas crisis
The euro briefly fell below parity to the dollar as a worsening energy crisis fans expectations for a recession in the single currency area. But the unit quickly moved back above the $1.00 mark.
With Russian energy giant Gazprom starting 10 days of maintenance Monday on its Nord Stream 1 pipeline, the bloc -- and particularly gas-reliant Germany -- is waiting nervously to see if the taps are turned back on.
The single currency has been hit also by the European Central Bank's reluctance to raise rates -- in contrast to monetary policy elsewhere.
"A prolonged cut to the gas supply would halt a lot of economic activity, sending (Germany) deep into recession," said Tapas Strickland at National Australia Bank.
He said July 21 -- when the gas should be switched back on -- will be a crucial date.
"That date also happens to be the day of the next ECB meeting," Strickland added.
"Either of these events are key risk events. Russia playing gas politics by not switching on the gas supply would likely see the euro lurch much lower."
*This story was edited by Ahram Online
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