The euro has dropped below the dollar for the first time in almost 20 years due to the situation in Ukraine.
One euro cost $0.998 at 12:45 GMT, a decrease of 0.4 per cent from the previous day’s trading.
Fears that Russia will restrict Europe’s access to energy have increased the risk of a recession in the eurozone.
The European Central Bank has lagged behind other central banks in raising rates, significantly depreciating the euro.
As international investors want a higher return for holding assets valued in that currency, currencies often climb when the applicable central bank raises interest rates.
The US central bank’s hiking interest rates, as well as investors looking for a safe haven in dollar assets during times of global unrest, have helped to support the dollar’s strength in recent months.
In particular, items priced in dollars like crude oil will become more expensive for countries in the eurozone to import.
The eurozone’s already high inflation rate of 8.6 per cent for June could be made even higher by this.
According to a representative for the organisation, the ECB does not “target a particular exchange rate, but we are always vigilant to the influence of the exchange rate on inflation, in line with our mandate for price stability.”
The bank is expected to start boosting interest rates starting next week.
The value of the euro relative to the dollar has dropped by about 12% since the start of the year.
The euro has been valued higher than the dollar for the vast majority of its history. In the years after the currency’s introduction in 1999, it lagged behind the dollar; however, the last time it did so was in December 2002, less than a year after the first-ever distribution of euro notes and coins.