Signs of a crisis for the euro currency
The euro falls below 0.99 dollars, a first for 20 years
The euro, heckled by uncertainties about the European economy after the announcement on Friday of the complete shutdown of the Nord Stream 1 gas pipeline by the Russian Gazprom, was worth less than 0.99 dollars on Monday. We have to go back to December 2002 to find an equivalent change. Since the start of the year, the European currency has continued to weaken against the dollar. European stock markets opened sharply on Monday.
Admittedly, the euro, which is worth 0.9884 this morning, is still sailing around parity, but we can also remember that it has never been so low against the American currency for almost twenty years in December 2022. can also note that, since the beginning of the year, the European currency has continued to weaken against the dollar. European currencies are weighed down by further gas price hikes and the complete shutdown of the Nord Stream 1 gas pipeline.
This depreciation of the European currency has very concrete repercussions on the price of imports into France. Many companies dependent on foreign countries have to cope with an explosion in their costs and pass on part of these increases to consumer prices.
The other currencies do not resist either
At the same time, the dollar has continued to recover since the speech by the President of the American Federal Reserve (Fed) who advocates a firm monetary policy to curb inflation.
While the other currencies are not doing much better than the euro: the yen has fallen by more than 20% over the past year. In early September, the British pound briefly dipped below $1.15 for the first time since March 2020. The Cuban peso hit its lowest level since the 1990s against the US dollar on Sunday, as the island crosses its worst economic crisis in 30 years. It now takes 150 Cuban pesos to buy an American dollar – or a euro – on the black market, according to El Toque, an independent media considered illegal in Cuba, which publishes the quotation of the main currencies.
European stock markets unscrew
The complete shutdown of the Nord Stream gas pipeline is also hurting European stock markets. The German financial center, the country where the economy is most dependent on Russian gas, plunged Monday morning, at the opening, by 2.67%. Milan (-2.32%) and Paris (-2.08%) followed, but London, less sensitive, fell only 0.87%.
Results that are in line with last week. Over the whole of the past week, the Parisian rating had fallen by 1.70%.
Among the positive points of the past week for investors, the price of gas had fallen sharply, falling by more than a third to end at 210 euros per megawatt hour on the benchmark market, the Dutch TTF. It had come close to its historic record of 345 euros per megawatt hour on August 26. At the beginning of the year, it was around 70 euros.
A 30% gas price increase this Monday morning
The trend on the gas market reversed sharply, after Gazprom’s decision to “completely” shut down the Nord Stream gas pipeline. Europe’s benchmark gas price soared 30% to 272 euros per megawatt hour on Monday when the market opened, regaining much of the ground lost last week.
“Europe has done a very good job over the last two months maintaining high levels of gas storage and diversifying imports, but if Russia no longer supplies gas, it is likely that we will not be able to pass winter without noticeable restrictions or rationing,” the Deutsche Bank analysts write.
In addition, investors are awaiting the conclusions of a meeting of OPEC countries on Monday, thirteen members of the Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia, and their ten partners led by Russia. . They should be satisfied with a modest increase in their production targets, some experts even mention a reduction to support prices which have fallen in recent weeks.
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