Euro falls to two year low after Renzi referendum

The euro tumbled on Monday after Italian Prime Minister Matteo Renzi said he would resign as he conceded defeat in a referendum over his plan to reform the constitution

Euro falls to two year low after Renzi referendum

World Bulletin / News Desk

The euro sank to a 20-month low Monday and most Asian stocks also retreated as a fresh wave of uncertainty washed across markets after Italy's prime minister resigned following a heavy referendum defeat.

Analysts warned the single currency could soon hit parity with the dollar as investors are spooked by a long-running banking crisis in Italy and the possibility of elections that could usher in anti-EU parties.

Matteo Renzi stood by his promise to resign after his attempt to change the constitution was overwhelmingly rejected in Sunday's poll, leading to fears about the future of one the eurozone's biggest economies.

"His defeat in the face of populist moves will spawn concerns over the rest of Europe," said Yunosuke Ikeda, chief currency strategist at Nomura Securities in Tokyo.

The vote comes as anti-establishment, populist movements are gaining ground globally, fanning worries about the world order. Last month Donald Trump won the US election and in June Britain voted to leave the European Union.

Yannick Naud, head of fixed income at Banque Audi (Suisse) SA in Geneva, told Bloomberg News: "There is now a possibility of the euro reaching parity to the dollar. Maybe not right away, but it is a possibility if there is certainty regarding new elections."

The news sent the euro tumbling to $1.0506 at one point, its weakest mark since March last year, before edging back up slightly.

The dollar also fell to 112.88 yen from 113.51 yen in New York Friday before recovering. The yen is considered a safe bet in times of crisis and turmoil.

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Last Mod: 05 Aralık 2016, 10:03
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