Euro Wobbles,South Korean Won Steady As Political Turmoil Checks Sentiment.
The euro was subdued on Thursday after the widely expected collapse of the French government, stoking worries about the region’s second-biggest economic power, while the South Korean won steadied in the aftermath of the martial law debacle.
The single currency was fetching $1.0514, trading in tight ranges in early Asian hours but was close to the two-year low of $1.03315 it touched at the end of November as traders brace for a long-winded reckoning for France.
French lawmakers passed a no-confidence vote against the government on Wednesday, as expected, throwing the country deeper into a crisis that threatens its capacity to legislate and tame a massive budget deficit.
“The fall of the government means that political uncertainty will persist and continue to weigh on business and consumer confidence,” said ING economist Charlotte de Montpellier.
“Finding a new prime minister who will not face a motion of no confidence directly will be a very difficult mission. It is therefore likely that France will remain without a government for several weeks, if not months.”
When asked if the European Central Bank would step in to help France should market turbulence intensify, the central bank president Christine Lagarde would only say that financial stability was a relevant factor in price stability.
In a parliamentary hearing on Wednesday, Lagarde said euro zone economic growth could be weaker in the months ahead and downside risks dominate the medium term outlook.
Traders are all but certain the ECB will cut rates next week and are pricing in 157 basis points of easings by the end of 2025.(Cay)
Source: CNBC
