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MONEY

Euro falls to 20-year low against US dollar

The euro sunk below $0.99 on Monday, a 20-year-low, following the announcement last week that Russia would cut off gas deliveries to Germany via the Nord Stream pipeline.

Euro falls to 20-year low against US dollar
A $100-dollar bill is seen on top of Euro bills. The euro sunk below $0.99 on Monday, a 20-year-low.(Photo by DANIEL MUNOZ / AFP)

The euro fell 0.70 percent to 0.9884 dollars Monday at 0535 GMT, its lowest since December 2002.

The European currency has continued to weaken against the dollar since the start of the year, hammered by economic turbulence and uncertainties sparked by Russia’s invasion of Ukraine.

READ ALSO: What the dollar-euro exchange rate means for Americans in Europe

Russian gas giant Gazprom said Friday the Nord Stream pipeline due to reopen at the weekend would remain shut indefinitely.

It said it had discovered “oil leaks” in a turbine during a planned three-day maintenance operation, and that the pipeline would remain closed until it was repaired.

Resumption of deliveries via the pipeline which runs from near Saint Petersburg to Germany under the Baltic Sea, had been due to resume on Saturday.

Following the imposition of economic sanctions over the Kremlin’s invasion of Ukraine, Russia has reduced or halted supplies to different European nations, causing energy prices to soar.

The Kremlin has blamed the reduction of supplies via Nord Stream on European sanctions which it says have blocked the return of a Siemens turbine that had been undergoing repairs in Canada.

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ECONOMY

‘Very small breather’: German inflation unexpectedly slows down

German inflation unexpectedly slowed in November after months of increases, preliminary data showed Tuesday, as sky-high energy prices begin to ease.

'Very small breather': German inflation unexpectedly slows down

The inflation rate in Europe’s top economy fell back to 10 percent this month, federal statistics agency Destatis said, after hitting a record high of 10.4 percent in October.

Analysts surveyed by Factset had expected an acceleration of 10.5 percent in November.

The surprise dip comes as “energy prices have eased slightly”, Destatis said, although it noted they were still 38.4 percent higher than a year earlier.

As in other countries across Europe, Germany’s recent consumer price hikes have been fuelled by soaring food and energy costs in the wake of Russia’s war in Ukraine.

READ ALSO: EXPLAINED: 10 ways to save money on your groceries in Germany

The German government has unveiled a €200 billion energy fund to shield households and businesses from price shocks, and has raced to diversify supplies after Russia cut gas deliveries.

Tuesday’s inflation data offered a “very small breather” for a country bracing for a difficult winter, said ING bank economist Carsten Brzeski.

But he cautioned it was too soon to hope inflation was on a downhill path.

“The pass-through of higher wholesale gas prices is still in full swing. Many households will see the first price increase only as of January 1st,” he said.

READ ALSO: How energy prices are rising across Germany

European Central Bank President Christine Lagarde echoed that sentiment Monday, when she said the eurozone had not yet reached peak inflation.

Like other central banks around the world the ECB has moved aggressively to curb red-hot inflation, lifting its key interest rates by two percentage points since July.

Lagarde has repeatedly said the bank would continue to raise rates in its battle to bring inflation back to its two-percent target.
The next rate hike is expected at the ECB’s upcoming December 15th meeting.

READ ALSO: Has Germany’s sky high inflation finally peaked?

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