Euro falls to two-decade lows

Currency dealt blow by energy crisis, recession concerns

LONDON:

The euro fell to a fresh two-decade low on Tuesday, dealt a fresh blow by renewed concern that an energy shock will keep inflation elevated and makes recession in Europe all but certain.

China’s yuan, meanwhile, weakened to a two-year low and sterling briefly touched its weakest since March 2020.

Business activity data from Europe was not as bad as feared, pushing the euro off the 20-year low hit early in the session, at $0.99005.

Still, euro zone business activity contracted for a second straight month in August and a bleak outlook kept the euro down. At 1116 GMT, the currency was down 0.15% at $0.9926 and holding below the key $1 level. “Renewed concerns about Europe following the spike in gas prices are the main reason why the euro is down,” said Berenberg Chief Economist Holger Schmieding.

British and Dutch wholesale gas prices rose sharply on Monday as the prospect of maintenance on the main Russian pipeline to Europe put markets on edge.

Russia will halt natural gas supplies to Europe via the Nord Stream 1 pipeline for three days at the end of the month, the latest reminder of the precarious state of the continent’s energy supply.

Published in The Express Tribune, August 24^th, 2022.

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