Poor economic prospects in the euro zone drag down the euro exchange rate downward

With the soaring natural gas and power prices in Europe, the exchange rate of the euro to the US dollar fell below 1 to 1 on the 22nd. Analysts believe that due to the lingering of energy shortage and high inflation, the market is concerned about the economic prospects of the euro zone, and the exchange rate of the euro to the US dollar may continue to run below the parity.

This is the euro sculpture shot in Frankfurt, Germany on August 22. (Photo by Xinhua News Agency reporter Shan Weiyi)

Russia's Natural Gas Industry Co., Ltd. said on the 19th that the "Beixi-1" natural gas pipeline will stop the gas supply for 3 days from August 31 to carry out technical maintenance and preventive maintenance. This exacerbates the tension and uncertainty of the energy supply in Germany and even the euro zone.

Personal concerns about natural gas supply have caused panic purchases in the European natural gas and power market. On the 22nd, the price of natural gas futures contracts delivered by the Dutch ownership transfer center of natural gas in Europe in September was increased by about 20%. Affected by this, the market price of the euro zone has also fluctuated sharply.

The rise in energy prices has made investors more pessimistic about the economic prospects of the euro zone, and a sharp rise in risk aversion to the euro. Data released by the Frankfurt Stock Exchange in Germany showed that the exchange rate of the euro to the US dollar fell below 1 to 1 on the 22nd, and the minimum fell to 1 to 0.9934, a new low in 20 years.

CMC market analyst Constantine Oldenbur pointed out that German power and natural gas prices have risen significantly, which has become an important risk factor for the German economy. Enterprises in the entire euro zone are facing cost "explosions" or even bankruptcy threats.

Ralph Salvin, a German commercial bank economist, also believes that energy prices have continued to rise sharply, bottlenecks of raw material supply and global economic weakness make the euro area dull.

This is the euro and US dollar banknotes taken in Madrid, Spain on August 23. (Photo by Xinhua News Agency reporter Meng Dingbo)

The Bank of Germany issued a report on the 22nd that due to the continuous energy crisis, the possibility of atrophy of the German economy in the winter has increased in the winter, and the inflation rate in autumn is expected to reach about 10%.

The Director of the Institute of Economics of Germany, Marcel Frastasia, believes that "price impact" is affecting a considerable proportion of population. From high inflation to suppress consumption to reduction of enterprise investment, and then to the spiral decline mode of weak economic weakness, it will continue in the medium term to form a vicious circle.

According to data from the German Federal Statistics Bureau, Germany's retail sales in June this year have fallen in the largest year -on -year decline since 1994.

Experts said that at present, the energy supply of energy in the euro zone is extremely uncertain this winter, and risk factors include the development of geopolitical conflicts and the duration of extreme drought weather. From the perspective of market pricing, investors expect a shortage of electricity in winter.

Kitt Joks, chief global foreign exchange strategist in French Industrial Bank, said that the price of natural gas rising, the large drop of water levels in the Rhine and high inflation are developing a devastating blow to business confidence. If the important data of the upcoming German and the euro zone is disappointing, the exchange rate of the euro to the US dollar may continue to be lower than the parity. (Reporter Shao Li)

(Source: Xinhua News Agency client)

【Edit: Fu Sakura】

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