The European currency: the euro continues to lose value and approaches parity with the dollar

Nothing stops the depreciation of the single European currency. The euro is about to reach parity with the dollar. By the close of the markets after Wednesday’s session, the European currency had been paid at $ 1.0171 and reached $ 1.0162. These are levels that have not been seen since December 2002 that do not prevent even the bad economic data from the United States known this Wednesday.

Fears of a concomitant crisis in Europe are greater. The markets they fear the risk of an economic recession by the end of the year and that the energy crisis will worsen if, as many leaders warn, Russian President Vladimir Putin permanently closes the taps on the pipelines that carry Russian gas to Europe.

The president of the European Commission, Úrsula Von der Leyen, warned earlier this Wednesday in the European Parliament that this cut in the offer could be imminent, although she tried to reassure her by saying that the European Union plans to deal with it.

The European Central Bank warned last week that, if it occurs, this gas cuts it would put the block head in the recession. The plans of the European Commission, in the event of a total cut in the supply, provide for energy rationing.

The programs

Despite all this data and predictions, there was good news. It was learned during the morning that the Norwegian government he had managed to defuse a strike which would have suspended 60% of gas exports. The UK, the Netherlands and Belgium would have paid the price. But not even that good news was enough to help the euro stop the fall.

The depreciation of the European currency is not given only in reference to the US dollar. It also loses value against the poundwhich yesterday anticipated by more than half a point to go to 85.46 pence per euro despite the political crisis unleashed in the United Kingdom with the resignation of several ministers who tried to force Prime Minister Boris Johnson to leave.

The depreciation of the euro makes European imports more expensive, including gas and oil, as well as many commodities. This exacerbates inflation. The winners of this fall of the euro are the manufacturing industries in which Europe stands out and which allow it to maintain a trade surplus with the rest of the world, such as aeronautics, automobiles, chemicals or luxury products.

The cups

To control this depreciation and inflation at the same time, at the risk of putting the last nail in the recession box, the European Central Bank plans to start raising rates this month. which has never increased in the past 11 years.

If the previous announcements do not fail, it will be a first raise of 0.25 points. In the euro tower in Frankfurt we want to see the economic evolution of the coming months before applying further increases, which would not arrive before September.

This Wednesday, the main European exchanges They rebounded this Wednesday, except for Madridwith investors seizing the opportunity to buy at a good price despite the market environment remaining bleak.

The Paris stock exchange closed with a rise of 2.03%; that of London, 1.17% and that of Frankfurt, 1.56%.

The Milan stock exchange also closed the session up (+ 1.04%), while that of Madrid was the only one to close in the red (-0.14%).

PB