The euro briefly fell below parity with the U.S. dollar in New York on Wednesday for the first time in around 20 years, as investors sold the European currency amid fears that energy shortages stemming from Russia's invasion of Ukraine could trigger economic setback in Europe.

Investors also rushed to shed the euro on the widening interest-rate differentials between Europe and the United States, traders said.

Photo illustration displays a collection of fifty and twenty dollar bills with fifty Euro banknotes. (SOPA Images/LightRocket/Getty/Kyodo)

The euro was quoted at $0.9998 at one point in the morning, making it less valuable than the dollar for the first time since January 2002.

The U.S. Federal Reserve is expected to keep raising interest rates aggressively toward the year-end to curb soaring inflation, encouraging market players to buy the dollar against the euro and the Japanese yen among other currencies.

Dollar-buying also got a boost from a higher-than-expected U.S. consumer price index for June, up 9.1 percent from a year before, traders added.

Meanwhile, the yen temporarily declined to around 137.80 versus the dollar, marking a fresh low since September 1998, before returning to the lower 137 range in afternoon trading.