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Euro Slides to 20-Month Low as Renzi Concedes Referendum Defeat
Euro Slides to 20-Month Low as Renzi Concedes Referendum Defeat
-- Italian premier says he will offer resignation on Monday
-- Pound, Aussie also drop as referendum fallout spreads
The euro fell to the lowest level since March 2015 as Italian Prime Minister Matteo Renzi said he will resign after conceding defeat in the nation’s constitutional referendum.
The single currency slid the most since the aftermath of Britain’s European Union referendum. Higher-yielding currencies such as the Aussie and and kiwi dollars also retreated.
The euro slid 1.3 percent to $1.0524 as of 12:25 a.m. Rome time, the most since June 24. It earlier touched $1.0506, the lowest since March 16, 2015.
“Expect volatility premiums to rise and the euro to trade below $1.05 against the dollar, potentially testing last year’s low of $1.0460 in a ‘no’ vote scenario,” Petr Krpata, ING Groep NV’s London-based chief foreign-exchange strategist for Europe, Middle East and Africa, said before the referendum. “While the market is positioning for the risk of ‘no’ vote outcome, a knee-jerk reaction is still likely to be a lower euro” as it would “underline the upcoming risk” of other elections in Europe.
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The result is the latest in a series of political events that have roiled financial markets in 2016, following Britain’s vote to leave the European Union in June and Donald Trump’s victory in last month’s U.S. presidential election. Still, with a “no” vote largely expected, the initial currency-market reaction is relatively muted -- the pound fell by more than 10 percent as it became clear that the U.K. had voted for Brexit, while the dollar fluctuated wildly in the hours following Trump’s win.