Euro drops to its lowest in 5 years against dollars

What you should know

• As fears of a eurozone recession inspire speculators to pile on the bearish wagers, the euro has dropped to a five-year low, rekindling the chance that the currency may reach parity with the dollar for the first time in two decades.
• Further bearish momentum to the euro, on the other hand, could prompt ECB intervention, which was last seen in 2000 and 2011, especially if euro weakness spurs bond market disruptions in weaker countries like Italy.
• Russia’s decision to shut off gas supplies to Bulgaria and Poland is the latest setback for the currency, which is already under pressure from the dollar’s rise and widespread COVID-related lockdowns in China, a key market for bloc exports.
• The European Commission has warned firms not to give in to Russia’s requests to pay for gas in ruble as the continent scrambles for a cohesive response to Russia’s weaponization of its energy resources.
• However, Uniper, a German business, announced that payments for Russian gas would be made to a Russian bank rather than a European bank.
• The Russian currency, the ruble, appears to be strengthening despite significant opposition in the shape of the most severe economic sanctions ever placed on a country. Because of the success of the Ruble in the Forex market, the Russian Central Bank felt secure enough to cut interest rates to 14% to Favour economic growth.