Euro Drops to Dollar Parity for First Time in Two Decades
- Energy crisis, recession risks weigh on the common currency
- Weaker euro may stoke record inflation in the euro area
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The euro has suffered a swift and brutal slump this year, and now it’s crossed a major threshold for the first time in more than two decades: parity with the dollar.
The 12% decline is the result of multiple pressures, from the war in Ukraine to an energy crisis and the growing risk that Russia cuts off gas exports and pushes the euro area into recession. Add in central banks moving at vastly different speeds and an in-demand dollar, and some analysts say parity may not be the end point, but merely a stepping stone to further weakness.