That’s why the euro is on the decline

euro currencyThe looming populist government in Italy has sent the euro rate down on Wednesday.

A looming populist government in Italy has sent the euro rate down on Wednesday. The price fell to 1.1764 US dollars, reaching its lowest level since December. But then the common currency recovered slightly, it was last traded in New York with $ 1,1802. The European Central Bank (ECB) had previously set the reference rate at 1.1884 (Tuesday: 1.1883) dollars.

Against the franc, the euro also recovered and moved above the mark of 1.18 to currently 1.1817 francs. Meanwhile, the US dollar defends the parity level. One dollar costs 1.1013 francs.

The focus was on the media reports more likely formation of a Euro-critical new Italian government between the Five Stars and Lega. The potential government plans huge spending increases and tax cuts. “The new governing coalition that Italy is likely to face will pose new challenges for the EU,” said Karsten Junius, chief economist at Bank Sarasin. “Your fiscal plans are incompatible with the stability agreements in the monetary union.”

Above all, a very Euro-friendly draft of the coalition agreement between the two parties caused turbulence. The paper leaked to the Huffington Post deals with the requirement that 250 billion euros of Italian sovereign debt be issued to the European Central Bank (ECB). According to star boss Luigi Di Maio, the draft has been revised in important points.

The Italian economist Carlo Cottarelli spoke of a “so unrealistic proposal that I wonder why he was written down in black and white”. According to Junius, the ideas end the discussion about a realistic deepening of monetary union, as proposed by France.

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