Euro falls below parity against U.S. dollar

Frankfurt, Germany | Xinhua | The Euro on Wednesday briefly slipped below parity against the U.S. dollar in intraday trading after data released by the U.S. Department of Labor showed that the Consumer Price Index (CPI) surged 9.1 percent from a year ago in June.

The exchange rate on Wednesday plunged to 0.9999 dollars for the first time since December 2002.

The U.S. inflation data, a fresh four-decade high, fueled investors speculation of further aggressive interest rate hikes by the Fed, which led the U.S. currency to strengthen, according to Der Spiegel, a German weekly news magazine.

The euro has lost around 12 percent of its value against the dollar since the beginning of this year, and the depreciation of the single currency of 19 European Union countries is largely attributed to the dollar strength and the worsening economic growth prospect in the euro area.

The Fed raised its target federal funds rate by a quarter percentage point from near zero in March, beginning its tightening cycle to curb surging inflation. In May, it increased the rate by half a percentage point. It hiked the rate by three-quarters of a percentage point in June, the most aggressive hike since 1994.