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Euro falls to 20-year low against US dollar

The euro sunk below $0.99 on Monday, a 20-year-low, following the announcement last week that Russia would cut off gas deliveries to Germany via the Nord Stream pipeline.

Published: 5 September 2022 09:08 CEST

Euro falls to 20-year low against US dollar

A $100-dollar bill is seen on top of Euro bills. The euro sunk below $0.99 on Monday, a 20-year-low.(Photo by DANIEL MUNOZ / AFP)

The euro fell 0.70 percent to 0.9884 dollars Monday at 0535 GMT, its lowest since December 2002.

The European currency has continued to weaken against the dollar since the start of the year, hammered by economic turbulence and uncertainties sparked by Russia’s invasion of Ukraine.

READ ALSO: What the dollar-euro exchange rate means for Americans in Europe

Russian gas giant Gazprom said Friday the Nord Stream pipeline due to reopen at the weekend would remain shut indefinitely.

It said it had discovered “oil leaks” in a turbine during a planned three-day maintenance operation, and that the pipeline would remain closed until it was repaired.

Resumption of deliveries via the pipeline which runs from near Saint Petersburg to Germany under the Baltic Sea, had been due to resume on Saturday.

Following the imposition of economic sanctions over the Kremlin’s invasion of Ukraine, Russia has reduced or halted supplies to different European nations, causing energy prices to soar.

The Kremlin has blamed the reduction of supplies via Nord Stream on European sanctions which it says have blocked the return of a Siemens turbine that had been undergoing repairs in Canada.

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France in 'close talks' over debt rating

Finance Minister Bruno Le Maire had offered “detailed explanations to Standard and Poor’s of everything we’re doing to get our public finances under control” ahead of their rating decision in early June, Borne told Jewish community broadcaster Radio J.

Citing “relatively large fiscal deficits and only modest progress with fiscal consolidation,” Fitch last month downgraded France’s debt rating to AA-, several notches below the top AAA class awarded to countries including Germany and the Netherlands.

Such ratings help determine borrowing conditions when governments go to financial markets to raise money.

France’s debt hit almost 112 percent of annual output by the end of last year, driven by a “whatever-it-takes” response to the coronavirus crisis and generous support to households and firms through the energy price crunch provoked by Russia’s invasion of Ukraine.

“We’ve introduced reforms, we’ve recently revealed a path for government finances into 2027… reducing our deficit to 2.7 percent of GDP” from its present level closer to 5.0 percent, Borne said.

The finance ministry hopes controls on government spending combined with faster growth can bring overall debt levels down to 108 percent of GDP in the coming five years.

With less optimistic assumptions, Fitch last month forecast France’s debt-to-GDP ratio would in fact grow to more than 114 percent over the same period.

“We are acting to support our firms and economic growth, to support activity,” Borne told Radio J.

“We are not simple spectators waiting to see what economic conditions will be like,” she added.

In its April note, Fitch did praise a stronger labour market in France thanks to reforms introduced since President Emmanuel Macron took office in 2017, with historically stubborn unemployment now down to 7.1 percent.

Macron’s widely contested pension reform raising the retirement age to 64 — resulting in mass demonstrations and intense opposition in parliament — “could further support the labour market and possibly improve growth prospects in the medium to long term,” Fitch added at the time.

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