EURO Falls Below Dollar for the First Time since 2002

Alt: = "Euro notes"

The euro has fallen below the US dollar for the first time in about 20 years as the war in Ukraine pushes the European Union's single currency down.

€1 exchanged for $0.998 on the foreign exchange market, down by 0.4% in yesterday’s trading.

Fears that Russia may block Europe's supplies of energy have triggered the chances of recession in the euro area.

The European Central Bank has delayed other central banks in raising rates, further weakening the euro.

Experts say currencies likely rise when interest rates are increased, as such entices international investors to hold assets priced in that currency with expectation of huge returns on their investments.

The dollar has also been strong in recent months, as a result of the US central bank raising interest rates, and investors seeking the safe haven of dollar assets in times of global turmoil.

A weakening currency will make imports more expensive for eurozone countries, especially goods priced in dollars such as crude oil.

That could contribute to even higher inflation in the eurozone, which is already experiencing 8.6% inflation rate as of June.

A spokesperson for the ECB told BBC that it does not "target a particular exchange rate. However we are always attentive to the impact of the exchange rate on inflation, in line with our mandate for price stability."

The bank is likely to start raising interest rates next week.

The euro has fallen almost 12% against the dollar since the beginning of the year

The Euro has been worth more than the dollar for most of its history. It dropped below the dollar in the years following the currency's launch in 1999, but the last time it exchanged below the dollar was December 2002 - less than a year after euro notes and coins were launched.

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