Euro Dips Below $0.99 On Fears Of Stopped Russian Gas
For the first time in 20 years, the price of the Euro slid below $0.99 after Russia stopped the flow of natural gas. This move has renewed the risk of a full-fledged deep recession in the EU countries, including Germany.
On Monday morning, the Euro was trading at $0.991 (-0.44%) and had earlier made a lot of $0.988. Levels like these were only seen during 2002, which highlights the intensity of the situation.
After renewed fears of recession and poor economic conditions, a flight towards safety was witnessed as the investors started buying dollars against other currencies. At the time of writing this, the dollar index was at 110.04, which is the 20-year high.
Nord Stream 1 Pipeline Is Shut Off
The main catalyst for the poor performance of the Euro was the shutdown of the Nord Stream 1 pipeline by Russia. Through this pipeline, Russia was supplying gas to the Euro region, and a lot of EU countries were highly dependent on that gas.
Now that the gas deliveries are halted, the EU countries will have to make some alternative measures. Furthermore, winter is upon Europe, and it could be difficult to survive without Russian gas. On top of that, the prices of energy will also skyrocket in the EU, which will further push pressure on the Euro currency.
Gazprom (the state-owned company in Russia) claimed that the natural gas flow would remain stopped until an oil leak in the turbine was fixed. However, experts believe that the real reason is the deal between G-7 members that capped the price of Russian oil.
After the Russian invasion of Ukraine, the tension between Russia and the EU countries is already at its peak. And after the disruption of natural gas, it could reach new heights.
Earlier, Russia had already capped the natural gas flow through the pipeline, which supplies to Germany. As a result, the pipeline was operating at only 20% of its original capacity.
Currently, the prices of electricity and natural gas are already skyrocketing in EU countries. Experts believe that this rise will continue until Russia resumes the gas supply through the pipelines.