As the economic winter approaches, the euro fell further, with the single European currency falling to US$1.0145

The euro edged closer to parity against the dollar yesterday as one analyst said “winter is coming” for the continent’s economy.

The single European currency fell to just $1.0145 against the dollar, a new 20-year low.

It has fallen nearly 11 percent against the dollar this year as fears that Russia will cut gas supplies fuel expectations of a recession.

Slump: Europe’s single currency falls to just $1.0145 against the greenback, a new 20-year low

“The eurozone economy is showing resilience, but winter is approaching,” Pantheon Macroeconomics economists said in a note.

“The war in Ukraine started when virus restrictions were being eased, which created huge uncertainty when we hoped the economy was about to recover.”

The note said there is now clear evidence that soaring inflation — which hit a record 8.6 percent in June — is eroding the economy’s purchasing power.

Carsten Brzeski, head of global macro at ING Bank, said the effects of labor shortages that are disrupting flights and trains and inflation are stifling new investment and industrial orders.

“The long-awaited recovery of the Eurozone has been cancelled,” he said.

The warning comes as the US currency has been strengthened by a series of sharp interest rate hikes by the Federal Reserve, while the European Central Bank has been reluctant to take similar measures.

Dirk Schumacher, head of European macro research at Natixis CIB, said: “The euro’s weakness reinforces the perception that the ECB is behind the curve.”

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