For the first time in 20 years, the euro has slipped below parity with the dollar on Monday. This was the result after Russia declared that it intends to stop the major gas supply to Europe for an unspecified time.
According to London time (by 10:00 a.m.), the common currency of the European Union was exchanged about 0.9911 versus the dollar, having bounced back earlier on Monday after it marked a low of $0.9881.
The dollar index aims to measure the American currency against six other main banknotes. The dollar has already surpassed the new high in the last two decades. The anxiety over the potential energy crisis and Europe’s economic growth also caused the British pound to drop.
The Russian-state owned supplier Gazprom announced on Friday that it wouldn’t carry on with the natural gas delivery through the major Nord Stream 1 pipeline due to malfunction of the turbines. Gazprom made the announcement just a few hours after the G7 had reached an agreement to apply a price cap on Russia’s oil supply.
The European standard for natural gas trading, known as the Dutch TTF Gas Futures, marked an increase of 30% on Monday morning, reaching €282.5 for megawatt hour.
On Thursday, economists from the European Central Bank (ECB) will hold a meeting to discuss raising the standard’s deposit rate from 0 to 0.5% or maybe even to 0.75%. There have been concerns if the EU can answer its energy needs for the upcoming winter.
Paolo Gentiloni, the European commissioner for economy, told CNBC that the EU was expecting Russia to deliver the current deals. In case Moscow decided to weaponize the energy supply, he added that the EU was ready to act.
However, Europeans must focus on saving and sharing energy, although the European officials claim that the EU has a high level of storage.
The exchange rate for the British pound was 1.1498 against the dollar, before the UK government got its new prime minister. Having won the leadership race for the Conservative Party on Monday, Lizz Truss will replace Boris Johnson as a prime minister. She has to prepare for the cost of living crisis which was worsened by the high energy bills.
