TOKYO, Japan (Nov. 15) – Euro zone debt crisis seems to get deepen with further slipping of the euro on Wednesday against dollar and the yen. The top-rated members of euro zone, like France, are feared to get affected because of increasing pressure on the government bonds of these countries.
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| Euro Zone Debt Crisis Deepens as Euro Hits 1-month Low (Image Courtesy: breakthrougheurope.org) |
The euro drop as far as $1.3460 - the lowest in more than one month period - after the French bond yield spread over benchmark German bonds hit euro-era highs.
Italy’s failure under Mario Monti, former EU Commissioner, to crush fears over the country's long-term political and economic future has led to Italian yields shot back above the critical 7 percent level.
Adding further concerns over the crisis Masafumi Yamamoto, chief strategist at Barclays, said: "It's not clear if a new government in Italy can carry out measures that would satisfy the market. I would not be surprised if the euro falls to around $1.30 within two weeks."
As the euro currency union trapped in a nasty cycle of falls in government bonds which is hurting the region's big banks, further discouraging buoyancy in the area, the euro is coming under heavy pressure.
Funding strains among European banks are evident with euro/dollar three-month cross currency basis swap spreads widening to a level not seen since late 2008.
Reference: Reuters
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