Italian, Spanish political turmoil draw down euro

Posted On: February 03, 2013

The common currency of the European Union endured its biggest losses in 14 days on foreign exchange markets on Monday against the U.S. dollar as a consequence of political challenges in two of the 17-nation region's top economies, according to Bloomberg.

Spanish Prime Minister Mariano Rajoy is under fire for published reports stating he accepted illegal payments of cash. While attempting to reduce a four-year tax fraud sentence, ex-premier Silvio Berlusconi is closing in on front runner Pier Luigi Bersani. Italy's economy is the bloc's third-biggest while Spain's checks in at fourth.

"It doesn't help that the political background is a little bit more uncertain," head of global currency strategy Adam Cole with Royal Bank of Canada in London told the news source on Monday, noting European Central Bank policy makers' meeting this week will "be a negative background for the currency this week."

Spanish 10-year bonds surged 0.22 percentage points to notch their top level since the middle of December. Italian 10-year bonds increased 0.07 percentage points.

Reuters reports opposition officials with the Socialist Party called on Rajoy to relinquish power in the aftermath of the public corruption case and his People's Party is receiving low public support.

Category: Industry News

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