ISLAMABAD: The euro to a dollar exchange rate further nosedived on Monday morning and fell to 0.97 to a dollar in the open market trading.
The European currency has fallen to almost two decades low level on Monday (Oct 17) mainly because of unprecedented energy prices and Europe’s bid to buy maximum stocks of gas and oil as winter has started in most European countries.
In fact, the Russian invasion of Ukraine and Europe’s decision to impose economic restrictions of Russia have derailed the European economy within a few months. In Feb this year, Russia invaded Ukraine and a few weeks later, European Union imposed sanctions on Russia under influence of the United States.
Notably, European Union did not estimate properly the side-effects of sanctions against Russia. Consequently, the whole Europe is financial an economic meltdown in the form of energy crisis and depreciation of Euro’s value.
Earlier, in July this year, the Euro fell to a fresh 30 years low and fell equal to a US dollar.
The euro has been trading below or near parity since mid-August amid a historic energy crisis in Europe compounding the effects of surging inflation. The currency has dropped by more than 15% against the dollar in 2022.
Giorgia Meloni, who heads the far-right Fratelli d’Italia (Brothers of Italy) party, became Italy’s first female prime minister. Ms Meloni has campaigned on an anti-European platform and her coming to power marks the first far-right-led government since the Second World War.
the war and the energy crisis”, Ms Ozkardeskaya said.
The euro “will certainly remain under pressure as the Italian yields will likely detach from the rest of the eurozone and run toward the north. The wider yield spread between Italian and German bonds will likely continue pressure the euro lower”, she said.
“As a result, the European Central Bank should get more aggressive on its rate policy to stop the euro’s crumbling. But it may not get the euro’s back fast enough to avoid inflation spiral higher.”
Monetary tightening by central banks around the world to tame inflation and a strengthening US dollar that has reached a record high this year has also put pressure on the euro and other major currencies.
Italy has, as of April, about €2.75 trillion ($2.65tn) of sovereign debt, the world’s third largest after the US and Japan. It faces higher debt costs as the ECB raises interest rates.
