The Euro depreciated more than 1% against the US dollar on Monday and this was the third day the Euro recorded the biggest loss in a row in 2 years as the surge in oil prices continued to soar. The surge in oil prices has sparked concerns of a stagflation shock that could undermine hopes of a European recovery.
The conflict in Ukraine and tight international sanctions on Moscow have caused Russian assets to fall, while the country’s export prices such as precious metals, oil and gas have soared amid inflationary pressures.
Europe is the most vulnerable country as it imports as much as 40% of its natural gas from Russia and the Euro currency has become increasingly linked to oil prices. In other words, the higher the oil price, the more affected the euro currency is as investors worry about higher inflation and a blow to the economy.
In volatile London trade, the euro slipped more than 1% to $ 1.0806, the lowest level in May 2020. Cumulatively, the Euro has depreciated nearly 3% against the US dollar in the last three trading sessions, the biggest decline since the outbreak hit the market. in March 2020.
Oil prices rebounded on Monday as the risk of a US and European ban on Russian products and delays in Iranian talks led to prices soaring to their highest level since 2008.
According to Goldman Sachs, the continued shock of a $ 20 oil rise will slow real economic growth in the European region by 0.6% and by 0.3% in the United States. A worse scenario could be if Russian gas shipments through Ukraine are blocked, then the GDP of the european region could fall by 1% due to the gas oil factor alone.
