Dollar safe haven, Ukraine war, energy and recession fears combine to sap the common currency
Euro’s decline is feeding an inflation spike that’s already out of control, with prices rising at a record pace close to 9%The euro has suffered a swift and brutal slump in 2022, and now it’s crossed a major threshold for the first time in more than two decades: parity with the dollar.
The downward spiral hasn’t been accompanied by the type of existential doubts that hung over the euro when it plunged during its infancy in the early part of this century, or when the sovereign debt crisis took hold a decade ago. However, it’s still a problem for the European Central Bank . “The ECB does not target a particular exchange rate,” an ECB spokesperson said on Wednesday. “However, we are always attentive to the impact of the exchange rate on inflation, in line with our mandate for price stability.”
The single currency, meanwhile, has particularly suffered because of Europe’s proximity to the Ukraine war and its reliance on energy imports from Russia.
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