The Euro drops below $0.99 for the first time in

The Euro drops below $0.99 for the first time in

Currently, the European currency, the Euro, has fallen below $0.99 for the first time in 20 years, after Russia shut down the Nord Stream 1 pipeline, raising fears about Europe’s economic future, and thus subject to energy stress.

Specifically, the single European currency fell to a low of $0.9888 in trade on Asian markets, marking the first time the single currency has fallen below $0.99 since 2002, according to the FT.

In the political-economic context, this drop below this threshold came after Russia indefinitely suspended natural gas flows through the Nord Stream 1 pipeline, intensifying risks of recession in the bloc.

Russian state-owned Gazprom said the suspension was due to a technical fault. But the announcement came just hours after the G7 countries announced plans to continue capping the price of oil imported from Russia in a bid to reduce Moscow’s revenue that could be used to finance the invasion of Ukraine.

As such, stock futures reflected the worsening outlook for European economies, with the Euro Stoxx 50 down more than 3 percent in the open markets in Frankfurt and Paris.

According to analysts, they say that the use of gas as a political weapon could substantially complicate the European Central Bank’s plans to normalize monetary policy.

So “the ECB’s task is greatly complicated by the uncertainty around Russian gas supplies,” said Brian Martin, head of G3 economic research at ANZ, adding that a 0.5 percentage point increase in the ECB’s benchmark interest rate was already established this week.

In his view, “Moscow’s decision not to restart gas flows through the Nord Stream pipeline raises downside risks to growth, while raising inflation prospects.”

The euro reached parity with the dollar in July for the first time in 20 years as investors sought safe-haven assets in a worsening global economic environment.