The euro slid to a fresh 20-year low on Monday, falling below 96 cents against the US dollar ― the steepest decline in two decades ― after the rise of a far-right party in Italy's election rattled investor confidence.
The single currency, which came into physical circulation in 2002, slumped to $0.9550 against the greenback, before rising again. It was trading at $0.9613 at 9.21pm UAE time.
The euro has been trading below or near parity since mid-August amid a historic energy crisis in Europe compounding the effects of surging inflation. The currency has dropped by more than 15 per cent against the dollar this year.
Giorgia Meloni, who heads the far-right Fratelli d'Italia (Brothers of Italy) party, could become Italy's first female prime minister.
Ms Meloni has campaigned on an anti-European platform and her coming to power would mark the first far-right-led government since the Second World War.
The elections took place on Sunday after the collapse in July of Mario Draghi’s government, which had restored Italy's influence and credibility. His resignation prompted Italian bonds yields to rise as prices fell.
"The euro has been shattered this morning," said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.
The rise of Ms Meloni and her right-wing alliance with Matteo Salvini's League party and Silvio Berlusconi’s Forza Italia was "the terrible consequence of the pandemic, the war and the energy crisis", Ms Ozkardeskaya said.
The euro "will certainly remain under pressure as the Italian yields will likely detach from the rest of the eurozone and run toward the north. The wider yield spread between Italian and German bonds will likely continue pressure the euro lower", she said.
"As a result, the European Central Bank should get more aggressive on its rate policy to stop the euro’s crumbling. But it may not get the euro’s back fast enough to avoid inflation spiral higher."
Monetary tightening by central banks around the world to tame inflation and a strengthening US dollar that has reached a record high this year has also put pressure on the euro and other major currencies.
Italy has, as of April, about €2.75 trillion ($2.65tn) of sovereign debt, the world's third largest after the US and Japan. It faces higher debt costs as the ECB raises interest rates.
"Fiscal policy under Italy’s next government will have to adapt to higher interest rates and the energy crisis if public debt is to be reduced," Fitch Ratings said in a new report this month.
Fitch estimates that if 10-year sovereign bond yields stay close to 4 per cent, higher primary balances would be needed to keep the debt-to-gross domestic product ratio on a downward path. If yields remain at about 4 per cent, debt would remain stable at about 150 per cent of GDP.
The ECB raised its key interest rates by an unprecedented 75 basis points on September 8 and indicated further increases were coming as Europe is likely to slide into a recession.
The euro area annual inflation rate was 9.1 per cent in August 2022, up from 8.9 per cent in July. A year earlier, the rate was 3.0 per cent. EU annual inflation was 10.1 per cent in August 2022, up from 9.8 per cent in July.
Weak economic indicators and the anticipation of a right-wing win in Italy's polls piled pressure on the currency and markets on Friday.
The EuroStoxx index fell by 2.3 per cent on Friday. It is down by about 23 per cent this year.
The release of the eurozone purchasing managers index (PMI) on Friday showed that business conditions deteriorated further in September.
The S&P Global flash eurozone composite PMI fell to a 20-month low, sliding to 48.2 from 48.9 in August. This is the third consecutive reading below the 50 mark that separates growth from contraction. A reading below 50 indicates deteriorating conditions.
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
'Outclassed in Kuwait'
Taleb Alrefai,
HBKU Press
UAE currency: the story behind the money in your pockets
Hotel Silence
Auður Ava Ólafsdóttir
Pushkin Press
Tearful appearance
Chancellor Rachel Reeves set markets on edge as she appeared visibly distraught in parliament on Wednesday.
Legislative setbacks for the government have blown a new hole in the budgetary calculations at a time when the deficit is stubbornly large and the economy is struggling to grow.
She appeared with Keir Starmer on Thursday and the pair embraced, but he had failed to give her his backing as she cried a day earlier.
A spokesman said her upset demeanour was due to a personal matter.
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
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Price: From Dh439,000
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UAE currency: the story behind the money in your pockets
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Abu Dhabi GP schedule
Friday: First practice - 1pm; Second practice - 5pm
Saturday: Final practice - 2pm; Qualifying - 5pm
Sunday: Etihad Airways Abu Dhabi Grand Prix (55 laps) - 5.10pm
The%20specs
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How to watch Ireland v Pakistan in UAE
When: The one-off Test starts on Friday, May 11
What time: Each day’s play is scheduled to start at 2pm UAE time.
TV: The match will be broadcast on OSN Sports Cricket HD. Subscribers to the channel can also stream the action live on OSN Play.
UAE squad to face Ireland
Ahmed Raza (captain), Chirag Suri (vice-captain), Rohan Mustafa, Mohammed Usman, Mohammed Boota, Zahoor Khan, Junaid Siddique, Waheed Ahmad, Zawar Farid, CP Rizwaan, Aryan Lakra, Karthik Meiyappan, Alishan Sharafu, Basil Hameed, Kashif Daud, Adithya Shetty, Vriitya Aravind
RESULTS
Women:
55kg brown-black belt: Amal Amjahid (BEL) bt Amanda Monteiro (BRA) via choke
62kg brown-black belt: Bianca Basilio (BRA) bt Ffion Davies (GBR) via referee’s decision (0-0, 2-2 adv)
70kg brown-black belt: Ana Carolina Vieira (BRA) bt Jessica Swanson (USA), 9-0
90kg brown-black belt: Angelica Galvao (USA) bt Marta Szarecka (POL) 8-2
Men:
62kg black belt: Joao Miyao (BRA) bt Wan Ki-chae (KOR), 7-2
69kg black belt: Paulo Miyao (BRA) bt Gianni Grippo (USA), 2-2 (1-0 adv)
77kg black belt: Espen Mathiesen (NOR) bt Jake Mackenzie (CAN)
85kg black belt: Isaque Braz (BRA) bt Faisal Al Ketbi (UAE), 2-0
94kg black belt: Felipe Pena (BRA) bt Adam Wardzinski (POL), 4-0
110kg black belt final: Erberth Santos (BRA) bt Lucio Rodrigues (GBR) via rear naked choke
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ELIO
Starring: Yonas Kibreab, Zoe Saldana, Brad Garrett
Directors: Madeline Sharafian, Domee Shi, Adrian Molina
Rating: 4/5
