For the first time, since the euro was issued as a currency in the European Union, the dollar exceeded its price and settled at 0.98: that is, each dollar equals 0.98 euro cents. At about 9 am this Friday, the euro-dollar rate rose to 0.99 euro cents, and then fell again to 0.98.
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The euro’s decline accelerated this Friday and the single European currency fell to less than one dollar for the first time since the end of 2002, affected by the anxiety generated by the “old continent” economy.
In early trading, the euro was down 0.49 percent at $1.0110, after falling to $1.0072 a little earlier, approaching parity.
Derek Halpini, an analyst at MUFG estimated: “Natural gas will push the euro below parity, regardless of the ECB’s reaction.”
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Due to problems with Russian exports, gas prices rose on Thursday to levels not seen since March and the invasion of Ukraine.
The possibility of a gas shortage in the Eurozone is driving traders away from the single European currency. To avoid a blow to economic activity this could inflict, the European Central Bank is currently reluctant to raise interest rates too quickly, despite inflation.
In addition, the risk of “interest rate divergence” between eurozone countries is prompting the European Central Bank to exercise caution, said Matthew Ryan, analyst at Iberi.
“The euro will continue to approach parity unless the European Central Bank adopts a shock measure, such as a 0.50 percentage point rise” in its key interest rate, estimates Ipek Ozkardskaya, an analyst at SwissQuote.