For the first time in 20 years, the exchange rate between the euro (EUU) and the US dollar

has reached
parity -- meaning the two currencies are worth the same.

The euro hit $1 on Tuesday, down about 12% since the start of the year. Fears of recession on the
continent abound, stoked by high inflation and energy supply uncertainty caused by Russia's invasion of
Ukraine.

The European Union, which received roughly 40% of its gas through Russian pipelines before the war, is
attempting to reduce its dependence on Russian oil and gas. At the same, Russia has throttled back gas
supplies to some EU countries and recently cut the flow in the Nord Stream pipeline to Germany by 60%.

Now that critical piece of gas import infrastructure in Europe, has been shut down for scheduled
maintenance due to last 10 days. German officials fear that it may not be turned on again.

Before the war, the European Union consumed about 40 percent of its gas via the Russian pipelines.
The Eurozone faces high uncertainty and the risk of even higher inflation and a recession Russia cut back
gas supplies to Eurozone countries and recently, it has cut by 40 percent, the flow in the Nord Stream
pipeline to German.

When countries levied sanctions against Russia, responding to the Ukraine crisis, they derailed the
Russian ruble. The ruble lost 64 % to the US dollar following the sanctions. But the feat came with
consequences, as the sanctioners’ respective currencies paid the price.

While the US dollar remained a haven currency at times of crisis, as always comfortably sitting on the bid
side, other currencies were hit hard by the consequences of war. The Euro and the pound sterling were
among the most devastated by the crisis.

Since it began, the Russian invasion of Ukraine has been proving to be a drawback in the European
economic recovery from the pandemic while derailing even further the European Central Bank’s move
toward policy normalization.

In February, with the war in its early stages, the Euro reached its lowest point since May 2020, slipping
4.7% against the US dollar to a whopping $1.0886. During the same month, inflation reached an all-time
high in the euro region.

The decrease in value came following President Vladimir Putin’s commencement of a military operation
in Ukraine. The markets retreated despite the President’s announcement that he does not intend to
occupy Ukraine. Ukraine announced that the move by Russia is to be taken as a full-scale invasion.

The Euro is coming closer and closer to parity with the Dollar. The phenomenon will mark the first time
in 2 decades the two currencies were equal. The last time they were level was in December 2002.
The Euro is coming closer and closer to equal worth with the US dollar for the first time in 20 years. The
last time the two currencies were in parity was in 2002.

Traders have unanimously accepted the Euro’s drop after the Ukraine unrest’s inability to resolve. And it
is now seen as a lucrative short by the masses. As a result, buying U.S government bonds in dollars,
establishing a foreign exchange account in dollars, and trading long dollars against the euro or ruble are
now wise investment options.

There are several reasons for the euro-downturn, like 25 % of the EU’s oil imports and 40 % of gas
imports from Russia. First, such deep ties have bound the Euro with Moscow, a city invading Ukraine The
Euro is not the only currency that dropped because of the war. During the early stages of the war, the
pound has also slid to its lowest point since December 2020. Even though Russia accounts for only 5 %
of the UK’s imports, the ripple effect of the Ukraine crisis has fueled the pound’s downturn.

with disregard to sanctions and measures taken by several nations like the United States.

In addition, the central bank’s attempts at cooling down the subsequent inflation have not been
successful, and to make matters worse, gas prices are rocketing to record levels.

European currencies like the Czech Koruna (CZK) and the Hungarian forint (HUF) have also declined after
the war.

The PLN, the HUF, and the CZK registered a 12% decrease since the beginning of the invasion.

EUR/USD and USD/JPY dropped 6 percent in March after President Putin’s designation and
acknowledgment of new independent regions, Donetsk and Lugansk Peoples’ Republic, DLPR, in Ukraine
and Russian military strikes in the Donbas area. Analysts forecast additional tax on Russian forex traders
working with Russia-based brokers.

Russia’s top two banks face forex transaction limitations, and all their assets are frozen. In addition,
foreign involvement in Russian sovereign debt is prohibited, and president Biden has disclosed that
these measures were just the beginning. All this chaos points to a further decrease in the volatility of the
forex markets.

Russia insists on a diplomatic resolution to the conflict amongst unanimous outcry from various nations.
However, aside from Cuba, Nicaragua, Syria, and Venezuela, nations of the world have opposed Russia’s
designation of the DLPR. This means the sanctions will remain in place, and the volatility of the foreign
exchange market and the values of many associated currencies will continue to plummet.
The performance of the foreign exchange market is known to be influenced by the proximity of subject
countries and relations concerning energy import/export. With the Nord Stream 2 gas pipeline halted
due to the conflict and the sanctions against Russia, the eastern foreign exchange market has hit an
obstacle.