The euro could dip below the value of the U.S. dollar as the Eurozone's economy could be hit with rationing if Russia completely stops gas supplies to Europe, according to investment bank Barclays.
"Our economists estimate that a total loss of Russian supplies, combined with rationing of the remainder, could dent euro area GDP by more than 5 percentage points over one year," Barclays' economists wrote in a note carried by Reuters.
Moreover, if Russia stops natural gas supply to Europe, the EUR-USD will fall below parity, the investment bank added.
Since the start of the war in Ukraine, the euro has dipped by around 8 percent and is currently at $1.03.
Russia has already stopped gas supply to two EU member states, Poland and Bulgaria, and is reportedly threatening to halt deliveries to Finland, too, over its Scandinavian neighbor's choice to apply for NATO membership.
While some buyers, such as Poland and Bulgaria, refused to pay in rubles for Russian gas, others have started to prepare for that possibility.
Ten more European buyers of Russian gas have opened accounts at Russia's Gazprombank, designated by Vladimir Putin to process the ruble-for-gas payments that he demands from now on, a source close to Gazprom told Bloomberg on Thursday. So far, 20 companies from Europe have already opened accounts at Gazprombank, and 14 others have asked for the paperwork necessary to open such accounts, Bloomberg's source said.
At the same time, Russian gas supply to a Gazprom subsidiary that Germany placed under trusteeship in April has stopped, German Economy Minister Robert Habeck told Parliament on Thursday.
Russia on Wednesday imposed sanctions on Gazprom's subsidiaries in Europe, banning them from supplying Russian gas.
It's not only Germany and the Eurozone that would be hit if Russian gas is stopped.
Economies in central and southeastern Europe, the western Balkans, North Africa, and Central Asia could see their post-COVID recovery endangered if Russian gas supply is further disrupted, the European Bank for Reconstruction and Development (EBRD) said in a new report earlier this week.
By Tsvetana Paraskova for Oilprice.com
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