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Euro sinks after Italian referendum | |
(35 minutes later) | |
The euro fell sharply against the dollar after Italian Prime Minister Matteo Renzi suffered a heavy defeat in Sunday's referendum. | |
The fall continued after Mr Renzi announced his intention to resign. A short while ago the euro was trading at $1.0532, down 1.3% from Friday's close. | |
The single currency is now at its lowest level since March 2015. | |
The referendum was over plans to streamline parliament, but for many it was a chance to register discontent. | |
The Italian economy is already in a fragile state and a period of political uncertainty would be likely to do further damage. | The Italian economy is already in a fragile state and a period of political uncertainty would be likely to do further damage. |
In particular, Italy's banking industry is seen as vulnerable to a loss of confidence. | In particular, Italy's banking industry is seen as vulnerable to a loss of confidence. |
Many banks are struggling with a burden of bad debt and are in need of refinancing. | Many banks are struggling with a burden of bad debt and are in need of refinancing. |
That finance would be harder to come by amid a political crisis. | That finance would be harder to come by amid a political crisis. |
The size of Italy's government debt is also a concern. Government borrowing, depending on which figures you look at, is one of the largest in the eurozone. | The size of Italy's government debt is also a concern. Government borrowing, depending on which figures you look at, is one of the largest in the eurozone. |