USD and EUR parity

Exploration Essay

For the first time in 20 years, the Euro and Dollar have reached the same value, hinting that Europe will soon go through a recession following Russia’s invasion of Ukraine. This means that European countries now have to pay more for the goods and services they import while the exports will become cheaper in international markets. The downfall of the Euro accelerated in previous weeks as rumors of Russia, the EU’s largest energy provider, spread over them planning to completely cut off gas flows to Europe in order to fight back the sanctions. Currently speaking, 12 European countries have already suffered a total or partial cut-off in energy from Russia. Supplies from Nord Stream one also have been cut off for 10 due to maintenance, however, it’s unclear whether Russia would open it back up or not. The finance minister of France has also further stated “Let's prepare for a total cut-off of Russian gas. This is now the most likely option” on the matter. Considering the Euro losing its value, there have also been record-breaking inflations in Europe, with some countries reaching as high as 8.6% along with an economic slowdown. These two factors combined have also caused stagflation, where there is a slowdown in the economy while the prices of goods keep rising. While the European Central Bank has increased interest rates to combat inflation, it has received criticism since it decided to adopt this idea much later than the central banks of the USA and Canada did. This week, the European Commission is scheduled to present its updated economic forecast, which is expected to include a new downward revision. Many people are expecting this chaos to cause a massive unemployment hike and high inflation however, it is still too early to speak as Russia's plans to cut off Europe’s energy aren’t definite.