The euro plunges to a 20-year low after Russia shut down the Nord Stream 1 gas pipeline, raising recession fears
The euro plunged to a 20-year low yesterday after Russia tightened its stranglehold on gas supplies, deepened the continent’s energy crisis and deepened recession fears.
The common currency, which had already slipped to parity against the US dollar in the summer, fell below EUR 0.99 for the first time in two decades.
Stock markets across Europe fell after the announcement that the Nord Stream 1 gas pipeline from Russia to Germany would remain closed.
Fueling fears: Stock markets across Europe fell after the announcement that the Nord Stream 1 gas pipeline from Russia to Germany would remain closed
The Frankfurt Dax fell 2.18 percent and the French Cac 40 fell 1.26 percent.
Kremlin-controlled Gazprom said on Friday that Nord Stream, which was due to reopen over the weekend after three days of maintenance, would not do so due to a disruption.
That pushed wholesale gas prices up as much as 35 percent on Monday — 400 percent more than a year ago — and added to Europe’s headache over inflation, which is already at a record 9.1 percent.
The need to rein in spiraling prices means that despite the looming downturn, the European Central Bank is likely to announce a sharp 0.75 percentage point rate hike later this week, adding to the pain for borrowers.
John Hardy, head of FX strategy at Saxo Bank, said the euro is falling despite the prospect of ECB action.
Goldman Sachs said it expects the euro to fall further to $0.97 and stay there for the next six months.
A monthly business survey by S&P Global suggested the eurozone is headed for a recession as the deepening cost-of-living crisis discourages consumers from buying.
