September 6, 2022
As a result of Russia’s announcement that it would permanently shut down its main gas supply pipeline to Europe, the euro has dropped below $0.99 for the first time in 20 years.
As European markets started on Monday, the euro was trading at 0.9893 against the dollar just after 8:00 a.m. London time, hanging just below the 0.99 level (3:00 a.m. ET). Its lows earlier in the day were close to $0.9881.
The dollar index, which compares the value of the dollar to six major currencies, also reached a level not seen in two decades as the British pound fell due to concerns about the energy supply and the expansion of the European economy.
Gazprom, a major supplier of energy from Russia, announced it would stop supplying natural gas to Germany through the vital Nord Stream 1 pipeline, citing a malfunctioning turbine as the cause.
A plan to establish a price restriction on Russian oil was approved by the Group of Seven economic heavyweights hours before the announcement.
It comes ahead of the European Central Bank meeting on Thursday, when analysts predict it will increase its benchmark deposit rate from 0 to 0.75% amid worries about how Europe will be able to satisfy its energy needs this winter and the possibility of a slowdown in GDP.
While the U.K. waits to hear out who will be its new British prime leader, the pound was trading at 1.1465 against the dollar. The new premier will have to deal with an intensifying cost-of-living problem brought on by skyrocketing energy prices.
Source: CNBC
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