Euro Falls Below US Dollar for Second Time Since 2002, Reaching 20-Year Low

23 August 2022, 08:30 GMT+0000
Updated by Kyle Baird
23 August 2022, 08:30 GMT+0000
In Brief
  • The euro has dropped below the U.S. dollar for the second time in 20 years.
  • The EUR has hit a 20-year low.
  • An energy crisis and the upcoming winter add to the stress that Europe is facing.
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The euro has fallen below the U.S. dollar for the second time in 20 years, also hitting a 20-year low. The currency is now priced at 0.990 to 1 USD.

The euro has fallen below the U.S. dollar for the second time since 2002, data on the currency shows. Currently, EUR is priced at 0.990 to 1 USD. The currency has fallen by over 15% versus the USD over the past year. It has also hit a 20-year low, as Europe appears to be going through a crisis brought on by the effects of the invasion of Ukraine by Russia.

Costs in Europe have been going up, much like many other regions in the world. But soaring energy demands and Russia cutting off its gas supply has hit Europe hard.

The European Central Bank has been taking steps to ensure that it can have some control over the economic woes it is facing. It announced its first interest rate hike in 11 years last month. Meanwhile, the inflation rate has also been going up.

Shapeshift founder Erik Voorhees also commented on the development, saying that the implication was that the EUR could have collapsed over 20% against real goods, as the USD itself has fallen about 8.5% against real goods.

He made this connection from the 16% drop of the EUR against the USD. He did accept that Europeans consume a lot of locally produced goods and the supply chain is mostly handled in Euros.

The United Kingdom, which left the European Union, is also staring down growing economic woes. Experts have said that the region’s inflation rate could hit 18% because of rising energy bills. This would be the highest rate of inflation in almost 50 years.

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Questions of purchasing power and the affordability of goods have been a constant talking point since the year started. There has also already been a considerable jump in the prices of goods, and the forecasted inflation rate would be devastating.

The U.K. economy also shrank by 11% in 2020, the biggest jump it has taken in over 300 years. Now with rising inflation and a potential energy crisis, matters could get even worse.

Meanwhile, some are turning to bitcoin and crypto to hedge against inflation. However, some have argued that bitcoin has a correlation with stocks and is not an inflation hedge.

Disclaimer

BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.