Markets rumour on EU break-up
Rumors ran rife on Wednesday that the European Monetary Union might be headed for a breakup. One manifestation of the rumor was that the German Bundestag had ordered a report to look at what the consequences would be for a country that wanted to leave the EMU.
The German finance ministry called the rumors “absurd”, but the talk still affected currency trade even though most analysts believe that a breakup of the eurozone is not very likely at all. One analyst quantified the possibility of such a breakup at 5 percent or less.
Still, many analysts feel that the possibility cannot be entirely ignored. Amid the rumors, the euro lost another 0.6 percent in relation to the US dollar on Wednesday to $1.2234, an 8-month low. The euro also reached a 9-month low against the yen, falling 0.7 percent to ¥132.59.
The shared currency fell against sterling as well, 0.3 percent to £0.6749, a four week low. It hit a 2-year low against the Norwegian krone, falling 0.5 percent to NKr7.9053.
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