Latest €/US$ Exchange rate news (14th Nov 2011 15:30)
Optimism over the newly formed Italian and Greek governments was short-lived after EUR/USD plummeted over 1% this afternoon.
Investors began to question whether the new leaders of the two nations will be able to stem the eurozone debt crisis. Early in the morning, Italy sold €3 billion of five-year bonds at yields which, while down from last week's record market highs, were high enough at 6.29% to underscore the challenges the country's new technocratic government faces to restore market confidence. On Sunday, Italy's president appointed former European commissioner Mario Monti to head a new government which will implement urgent reforms to end a crisis that has endangered the whole eurozone. While Italy's problems have pushed the collapse of the much smaller Greek economy backstage, the IMF and European leaders will keep new premier Lucas Papademos under pressure to implement austerity measures aimed at staving off bankruptcy.
However, German lawmakers remain sceptical and are preparing for Greece’s departure from the eurozone in case the debt-strapped country’s new government doesn’t commit to carrying forward the promised reforms. First the Greek leader must win a vote of confidence on Wednesday before meeting eurozone finance ministers in Brussels on Thursday, where he will be expected to outline next year's draft budget before putting it to parliament. Meanwhile troika leaders are due to start arriving in Athens today, piling the pressure on Greece to qualify for a second bailout worth €130 billion and an €8 billion tranche from the earlier bailout, needed by mid-December.
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