Euro tumbles on Italy and Cyprus fears

Currencies Direct March 28th 2013 - < 1 minute read

The euro 
exchange rate
with the US dollar has tumbled to a four-month
low on the back of fears about Italy and Cyprus.

EUR/USD ploughed a trough of 1.2750 on Wednesday, as an Italian
ten-year bond auction saw the country’s borrowing costs climb to
five-month highs.

Meanwhile, Cyprus’s banks are due to reopen today for the first
time since the bailout package was agreed.

Tight capital controls are in place to prevent a run on the
banks, including a ban on cheques and a daily withdrawal limit of
€300, but investors remain wary.

As a result, even an embattled pound firmed up against the
single currency, with EUR/GBP hitting a two-month low of 0.84381 on

Sterling continues to come under pressure from the US dollar,
however, as a series of weak economic reports suggest the UK is
struggling to emerge from recession.

GBP/USD fell 0.24 per cent to 1.5127 yesterday after figures
confirmed UK gross domestic product (GDP) shrank 0.3 per cent in
the fourth quarter.

This was led by a 2.1 per cent decline in industrial production,
the biggest fall since the first quarter of 2009.

Written by
Currencies Direct

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