Euro hits 17-month low as French debt fears mount and Spain heads for snap election
The euro has dropped to a 17-month low against the dollar due to political instability in France and a snap election call in Spain. Investors are reacting to rising bond yields and fears of a potential eurozone debt crisis.
Why it matters
Currency fluctuations and bond market volatility in major European economies can trigger broader financial instability across the EU.
The euro fell to a 17-month low against the US dollar at the start of the week, as fiscal and political risks in Paris and Madrid revived memories of the eurozone debt crisis.The euro touched $1.1161 during Asian trading, after four consecutive weekly losses, and stood at around $1.12 at the European open, recovering slightly.Analysts at Dutch bank ING warned in a note on Friday that the market could "easily add another 2% in risk premium to the euro" if the bond sell-off extended.The spread between French and German 10-year bond yields stands at roughly 146 basis points, after the largest weekly increase in 17 years last week, according to data provider LSEG.France's 10-year yield rose to 4.917% in early trading on Monday, close to last week's 24-year high, after closing Friday at around 4.856%.French Finance Minister Roland Lescure insisted last week that France remained a solid borrower, unveiling a…
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