Value of euro falls to reach parity with dollar

The value of the euro currency has fallen to reach parity with the US dollar for the first time in almost 20 years, reported dpa and dpa-AFX.

At about midday on Tuesday (1000 GMT) €1 was worth $1, following a gradual decline over the last year, and a sharper fall in value since the end of June.

The euro has been under pressure on the financial markets due to the impact of the war in Ukraine and the comparatively restrained measures by the European Central Bank (ECB) to fight inflation.

"The fears of a recession are heightening" in Europe due to the conflict in Ukraine, according to experts at Commerzbank, with the main cause being restricted gas supplies from Russia.

German experts have said a recession could follow if the Kremlin chooses to turn off the tap for gas to Germany and Europe.

At the same time, the ECB has been slower than other central banks to wind up its monetary stimulus measures and raise interest rates in order to combat inflation.

The lower the exchange rate of the euro currency, the stronger other currencies like the dollar become. As a result, goods imported into Germany become more expensive, which in turns fuels inflation more.

On the other hand, German exporters will in theory benefit from a weaker euro as their goods become relatively cheaper for foreign consumers.

The last time the euro was at parity level with the dollar was just after the introduction of European currency's coins and banknotes at the start of 2002.