LONDON - The euro fell below $1.10 for the first time in almost two years and hit a new seven-year low against the Swiss franc as the war in Ukraine lowered expectations of European economic growth.
The European single currency fell by 0.8 per cent to $1.0967, its lowest level since May 2020, after Russian forces seized the largest nuclear power plant in Europe after a building at the complex was set ablaze.
The euro fell by 0.8 per cent against the Swiss franc, another safe haven, to 1.0066, its lowest since January 2015. The euro fell by 0.4 per cent against sterling to 82.56 pence, hitting its lowest level since July 2016.
The European consumption and economic growth prospects will be negatively affected by the war and the effects of surging energy and gas prices, according to analysts.
Neil Jones, head of FX sales at Mizuho, said that the euro is somewhat at the epicentre of risk aversion.
He said that given the European Central Bank reluctance to change its rate policy, the surging energy prices and the European Central Bank's reluctance to change its rate policy should continue lower.
Money markets do not expect interest rate hikes at the ECB's next meeting, but the U.S. Federal Reserve is certain to raise interest rates at its March 15 -- 16 meeting for the first time since the coronaviruses epidemic.
Amid rising pressure on central European currency, the Czech National Bank said on Friday it was intervening in the market to stem the depreciation of the crown, at almost 20 month low against the U.S. dollar.
Poland's central bank intervened this week but the zloty still hit a 13 year low against the euro, while Hungary delivered its most aggressive rate hike since 2008 as the forint fell to record lows.
The rouble fell towards record lows against the dollar and euro in volatile Moscow trade.
The U.S. dollar index rose by 0.6 per cent to 98.335, after touching its highest level since May 2020 against a basket of peers.
The Australian dollar was up to a four-month high of $0.7375 against the U.S. dollar as a result of the commodities boom.
Japan is a net importer of energy due to the high energy prices, which has prevented the Japanese yen from benefiting from the safe haven flows.
The yen briefly gained on the dollar when news of the fire came to an end, but later gave up those gains and was little changed at 115.38 per dollar.