The euro dropped below parity against the dollar the first time in almost two decades on Wednesday, as a hawkish US Federal Reserve and growing concern about recession risks in the euro area continued to batter the single currency.
“The inevitable has finally happened, with the euro breaking beneath parity with the greenback for the first time in two decades,” Michael Brown, head of market intelligence at Caxton in London, told Reuters.
The euro started this year on a strong note given a post-pandemic economic recovery. But the war between Russia and Ukraine, surging European gas prices and fears that Moscow could cut off supplies completely have hurt the single currency by raising the spectre of recession.
At 1245 GMT, one euro was at $0.998, down 0.4 per cent on the day to its lowest level since December 2002. It later retraced slightly to $1.004.
While a weaker euro should technically be good news for export-orientated companies, the plunge adds to headwinds for European stock investors already grappling with slowing economic growth, soaring inflation and a spiralling energy crisis.
The benchmark Stoxx Europe 600 Index just wrapped up its worst first-half plunge since 2008 and strategists have warned of more declines ahead.
The single currency has lost more than 10 per cent so far this year versus a surging dollar, and the drop below parity came after US inflation data.
“Parity is largely symbolic, but at the current juncture, a very weak euro is not helpful for inflation,” Dirk Schumacher, the head of European Macro Research at Natixis in Frankfurt, told Reuters.
“It also shows that Fed is more important for the exchange rate rather than the ECB at the moment,” Mr Schumacher said, adding that while the European Central Bank should not target the exchange rate explicitly, it should be paying more attention to it given the inflationary backdrop.
The ECB is scheduled to meet after the Federal Reserve later this month and it is expected to deliver its first rate increase in more than 10 years.
What is the FNC?
The Federal National Council is one of five federal authorities established by the UAE constitution. It held its first session on December 2, 1972, a year to the day after Federation.
It has 40 members, eight of whom are women. The members represent the UAE population through each of the emirates. Abu Dhabi and Dubai have eight members each, Sharjah and Ras al Khaimah six, and Ajman, Fujairah and Umm Al Quwain have four.
They bring Emirati issues to the council for debate and put those concerns to ministers summoned for questioning.
The FNC’s main functions include passing, amending or rejecting federal draft laws, discussing international treaties and agreements, and offering recommendations on general subjects raised during sessions.
Federal draft laws must first pass through the FNC for recommendations when members can amend the laws to suit the needs of citizens. The draft laws are then forwarded to the Cabinet for consideration and approval.
Since 2006, half of the members have been elected by UAE citizens to serve four-year terms and the other half are appointed by the Ruler’s Courts of the seven emirates.
In the 2015 elections, 78 of the 252 candidates were women. Women also represented 48 per cent of all voters and 67 per cent of the voters were under the age of 40.
COMPANY%20PROFILE
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UAE currency: the story behind the money in your pockets
MATCH RESULT
Liverpool 4 Brighton and Hove Albion 0
Liverpool: Salah (26'), Lovren (40'), Solanke (53'), Robertson (85')
Manikarnika: The Queen of Jhansi
Director: Kangana Ranaut, Krish Jagarlamudi
Producer: Zee Studios, Kamal Jain
Cast: Kangana Ranaut, Ankita Lokhande, Danny Denzongpa, Atul Kulkarni
Rating: 2.5/5
Company profile
Date started: 2015
Founder: John Tsioris and Ioanna Angelidaki
Based: Dubai
Sector: Online grocery delivery
Staff: 200
Funding: Undisclosed, but investors include the Jabbar Internet Group and Venture Friends
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