The exchange rate between the euro and the US dollar on Tuesday was the same for the first time in 20 years. As of Tuesday morning, one euro is exactly one dollar, which means that the value of the euro is lower by more than 12 percent compared to the value at the beginning of the year.
This means that the euro is the weakest against the dollar since the winter of 2002, twenty years ago.
Just one day ago, reported CCN, the dollar was just half a penny away from the euro. The euro hovered around $1.004 on Monday afternoon, down about 12% since the start of the year. Fears of a recession on the continent abound, stoked by high inflation and energy supply uncertainty caused by Russia’s invasion of Ukraine.
Although the news is positive for Americans doing business and traveling in Europe, it is a worrying sign for the health of the global economy.
The euro has been significantly weakened by the European energy crisis due to the war in Ukraine. Russia provided almost 40 percent of European gas before the war with Ukraine, and the bloc is now trying to reduce its dependence on Russian energy sources.
Parity between the euro and the dollar comes at a time when Russia has shut down a key gas pipeline – Nord Stream 1 – which carries gas to Germany. The gas pipeline is closed for annual maintenance.
Economic decline in Europe
Meanwhile, the dollar has strengthened as investors flee to the currency as a safe haven, while the Federal Reserve moves to raise interest rates at its fastest pace since 1994 to curb red-hot inflation.
And while fears of a recession are brewing in the US, experts believe that the chances of economic decline in Europe are much higher.