One year of war in Europe: How the US dollar, energy and food prices swirled

LONDON : Russia’s invasion of Ukraine has disrupted economies and markets around the world, from energy and food prices to European banks, emerging market stocks and the Russian currency.

Below are five charts that show how Europe’s biggest conflict since World War Two has shaped global financial markets in the last 12 months.


There are many reasons why king dollar reigned supreme in the past year and one is its status as the ultimate safe haven at times of uncertainty. The economic fallout of the war, which hit currencies such as the euro hard, also lifted the dollar.

The greenback is down from September’s two-decade highs, but it’s still up 8 per cent against a basket of currencies since the conflict began.

The impact on other safe havens such as governments bonds is complicated, however. Yes, U.S. and European bond prices rose in the days following Russia’s invasion as investors sought safety in top quality assets.

But they soon fell and yields soared as the war triggered an energy shock and inflation surged, while central banks responded with aggressive rate hikes. Germany’s 10-year Bund yield has risen to 2.4 per cent from just 0.2 per cent on Feb. 23, 2022.

Graphic: No knocking the dollar’s safe-haven crown


The war in Ukraine brought with it an energy crisis like no other. Post-COVID-19 reopening had already sent prices for anything from oil to coal to natural gas higher. But when Russian tanks rolled into Ukraine in late February, European natural gas prices rocketed by almost 400 per cent in two weeks. By August, they were 700 per cent higher than a year earlier.

Pre-war, Russia supplied over 30 per cent of Europe’s gas, most of it through a network of pipelines, thousands of kilometres long. Once Western sanctions hit, the flows of gas dried up. Energy prices soared, bringing the threat of blackouts, recession and a worrying switch back to dirtier sources of fuel.

Thankfully, winter has proven mild and Europe has found other suppliers, bringing the gas price back to around 50 MWh, its lowest since August 2021. But, there’s a lag of around 6-9 months between what happens on the wholesale market and what happens to consumers’ bills, meaning last August’s punishing spike to almost 350 MWh – equivalent to an oil price of over $200 a barrel – hasn’t even begun to bite.

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