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Euro falls to 20-year low against US dollar

The euro sunk below $0.99 on Monday, a 20-year-low, following the announcement last week that Russia would cut off gas deliveries to Germany via the Nord Stream pipeline.

Euro falls to 20-year low against US dollar
A $100-dollar bill is seen on top of Euro bills. The euro sunk below $0.99 on Monday, a 20-year-low.(Photo by DANIEL MUNOZ / AFP)

The euro fell 0.70 percent to 0.9884 dollars Monday at 0535 GMT, its lowest since December 2002.

The European currency has continued to weaken against the dollar since the start of the year, hammered by economic turbulence and uncertainties sparked by Russia’s invasion of Ukraine.

READ ALSO: What the dollar-euro exchange rate means for Americans in Europe

Russian gas giant Gazprom said Friday the Nord Stream pipeline due to reopen at the weekend would remain shut indefinitely.

It said it had discovered “oil leaks” in a turbine during a planned three-day maintenance operation, and that the pipeline would remain closed until it was repaired.

Resumption of deliveries via the pipeline which runs from near Saint Petersburg to Germany under the Baltic Sea, had been due to resume on Saturday.

Following the imposition of economic sanctions over the Kremlin’s invasion of Ukraine, Russia has reduced or halted supplies to different European nations, causing energy prices to soar.

The Kremlin has blamed the reduction of supplies via Nord Stream on European sanctions which it says have blocked the return of a Siemens turbine that had been undergoing repairs in Canada.

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MONEY

EXPLAINED: Why people in Italy might have to carry more cash from now on

Under Italy’s new budget law, retailers will no longer be fined for refusing card payments on amounts lower than €30 – a controversial move that is expected to have a knock-on effect for shoppers.

EXPLAINED: Why people in Italy might have to carry more cash from now on

Italy’s new budget bill, whose full text was made available to the media on Wednesday, is set to add yet another controversial chapter to the country’s long and troubled history of card payment laws.

According to a clause included in the 2023 budget law, fines for retailers refusing card payments on amounts lower than €30 will now be suspended until at least June 2023.

As set out by the bill, the six-month suspension will allow the newly created Ministry of Enterprises and Made in Italy to “establish new exemption criteria” and “guarantee the proportionality of the given penalties”. 

READ ALSO: Key points: What Italy’s new budget law means for you 

And, though it isn’t yet clear what new exemptions the government is currently considering nor what exactly is meant by “proportionality”, what’s certain is that residents will now have to repopulate their pockets with some good old banknotes because businesses – from taxi drivers to cafes and bars might not accept card payments for small amounts.

Fines for businesses caught refusing card payments had been introduced by Draghi’s administration back in June 2022, with retailers liable to pay “a €30 administrative fee plus four percent of the value of the transaction previously denied”, regardless of the amount owed by the customer. 

Euro banknotes in a wallet

Under Italy’s new budget law, retailers will no longer be forced to accept card payments for transactions under €30. Photo by Ina FASSBENDER / AFP

But, the measure had quickly sparked outrage among retailers, who lamented having to pay hefty bank commissions on every electronic transaction – some business owners even went as far as openly defying the law and organised themselves into a No-Pos Committee (Comitato No Pos). 

Given the latest developments, it seems like their efforts might just have paid off. 

But, while many business owners will surely be happy with the suspension, others across the country have already raised doubt about the potential ripple effects of the government’s move.

Aside from shoppers having to begrudgingly carry more cash than they’re currently used to, many political commentators are warning that the suspension might be a “gift to tax dodgers” in a country where, according to the latest available estimates, tax evasion costs state coffers nearly €90 billion a year.

READ ALSO: EXPLAINED: What’s changing under Italy’s post-pandemic recovery plan? 

It’s also worth noting that the introduction of fines for businesses refusing card payments was one of the financial objectives set out within Italy’s Recovery Plan (PNRR), which expressly refers to the fight against tax evasion as one of the country’s most urgent priorities. 

It is then likely that the new cabinet will at some point have to answer for the latest U-turn on Recovery Plan policies in front of the EU Commission.

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