Euro Declines amid Uncertainty in Spain

By TraderVox.com

Tradervox.com (Dublin) – The 17-nation currency dropped against its peers after pro-independent parties in Catalonia won a regional vote in Spain. The vote has strengthened calls for secession in defiance of Mariano Rajoy, the Spanish Prime Minister. The euro dropped against its most traded counterparts as the market speculated that Spain will derail in asking for bailout as political uncertainty mounts. The currency has dropped as Finance Ministers prepare to meet to discuss the Greek issue where they are expected to come up with a solution. The Japanese yen has surged from a seven-month low as technical indicators showed that the currency might have been oversold. The strengthening was limited by minutes of the last Bank of Japan meeting which showed that members were calling for more easing.

According to Masafumi Yamamoto, the Chief Foreign-Exchange Strategist in Tokyo at Barclays Plc, Spain is most likely to continue delaying for the financial assistance. He noted that the election results were not positive for the euro as the market will most likely shift its focus on Spain. The poor economic fundamentals in Europe will also be determined by Spain after the Finance Ministers meeting today. Artur Mas, the Catalan President, called an early election to establish a debate on independence, and he has won 50 seats of the 135 in the regional assembly. Separatist party, Catalan Republican Left, double its seats to 21 from ten it held previously.

The euro also dropped as Finance Ministers in the region returns to Brussels to discuss issue bailout woes. The meeting has been held twice with no results as creditors differ on the way to handle the Greek crisis. According to French Finance Minister Pierre Moscovici, the Finance chiefs are committed to achieving an accord as failing to do so would be irresponsible considering all the efforts that have been put to it from all sides.

The 17-nation currency dropped by 0.1 percent against the dollar to trade at $1.2961 from its mid-day trading in Tokyo on Friday Nov 23, after it had advanced by 1.8 percent over the week. The currency advanced to its strongest level against the euro since April 27 of 107.14 yen, before dropping to 106.69 which is 0.2 percent from its November 23 close in New York.

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