Euro Slumps To Parity With Dollar, Last Time Was 2002

Bloomberg News reports:

The euro has suffered a swift and brutal slump this year, and now it’s crossed a major threshold for the first time in more than two decades: parity with the dollar.

The 12% decline is the result of multiple pressures, from the war in Ukraine to an energy crisis and the growing risk that Russia cuts off gas exports and pushes the euro area into recession.

Add in central banks moving at vastly different speeds and an in-demand dollar, and some analysts say parity may not be the end point, but merely a stepping stone to further weakness.

The New York Times reports:

With a war on the eurozone’s border, an uncertain energy supply from Russia and a growing risk of recession, the pressures bearing down on the euro finally grew so strong that on Wednesday it dipped to parity with the U.S. dollar — a one-to-one exchange rate.

It’s a sight unseen since December 2002, in the early years of the currency’s existence. The aesthetically pleasing round number has become a focal point for investors.

In foreign-exchange markets, “1.00 is probably the biggest psychological level around,” analysts at the Dutch bank ING said in a note to clients. The euro’s sharp decline has come as the dollar, for generations one of the safest places to park money, has strengthened against almost every major currency in the world.

Breaking News: The euro fell to “parity,” a one-to-one exchange rate with the U.S. dollar, for the first time since 2002, highlighting economic concerns.https://t.co/bY0j7pFDRN

— The New York Times (@nytimes) July 13, 2022