Belgium (Brussels Morning Newspaper) Euro dropped further down compared to the dollar on Monday, below 0.99 dollars per euro, as investors are expecting a huge hit to the European economy following the complete shutdown of Russian gas deliveries through the Nord Stream pipeline.
The euro has been facing a downward slide as markets began increasingly tying it to gas prices, with the euro losing value as energy prices soared. The main pressure on gas prices came as a result of instability following the Russian invasion of Ukraine.
Following the invasion, Germany scrapped the Nord Stream 2 pipeline in the baltic sea, which was just completed and awaiting necessary permits to start operation. Gas flows to Germany continued through the older Nord Stream pipeline, but Moscow has been steadily reducing the flow in recent months, citing maintenance issues as the reason.
Most of the EU is currently scrambling to fill its gas storage facilities ahead of winter, though storage capacity varies significantly from state to state, and will most likely not suffice to cover the needs of European households and industrial consumers.
Russia cut the Nord Stream flow entirely last week, citing a planned maintenance as the reason, before announcing on Saturday that it would not resume gas deliveries, blaming an oil leak in the gas turbine.
The euro dropped to 0.9876 dollars, reaching its lowest level since 2002, with analysts now expecting the slide to continue, as they expect the lack of secure gas supply will severely impact the European economy.
The European Central Bank (ECB) is expected to try to shore up the euro with an unprecedented “supersized” interest rate hike of 75 basis points, seeking to stabilise the failing currency and reign in the rampant inflation in the Eurozone.