Euro slides against dollar on shock Finnish vote
LONDON (AFP) – The euro slumped against the dollar Monday as shock political gains for Finland’s main nationalist party stoked concerns over the eurozone debt crisis, analysts said.
As authorities prepared to discuss Portugal’s financial bailout, fresh worries over indebted eurozone nations helped the price of ‘safe-haven’ gold to reach fresh record highs.
The euro dropped to $1.4332 in London morning trade from $1.4431 late in New York on Friday.
Against the Japanese currency, the dollar fell to 82.84 yen from 83.09 yen on Friday.
On the London Bullion Market, gold hit an all-time peak of $1,488.68 an ounce, extending last week’s record run higher.
“The euro has got off to a terrible start during this (Easter) holiday-shortened week,” said Kathleen Brooks, analyst at trading group Forex.com.
“News that a euro-critical Finnish party — True Finns — had made big gains in the weekend’s general elections … caused the single currency to start on a weak note.”
Finland’s nationalist True Finns blew away even the most optimistic predictions on Sunday to suddenly become a major political force, even though the National Coalition captured the most seats in a parliamentary election.
The once tiny populist party won a stunning 39 seats, up from just six in the outgoing parliament, making it the only party to gain any seats in parliament and landing it in third place, according to a final tally.
The unprecedented result for the anti-immigration and anti-EU True Finns will likely push parliament to the right and could obstruct Finnish approval of bailouts for debt-laden European Union member states.
It comes as European and IMF officials were on Monday to start tough talks with Portugal on the scale and modalities of a bailout.
Negotiations on the sum and payback conditions in a deal expected to involve tens of billions of euros follow an evaluation mission to Lisbon by the European Commission, the European Central Bank and International Monetary Fund.
The government of Prime Minister Jose Socrates government fell last month when parliament rejected an austerity plan, forcing Lisbon to bow to market pressure and seek an European Union-IMF bailout.
Two other eurozone members, Greece and Ireland, have already received massive international bailouts. On Monday, the head of Greece’s central bank insisted that a Greek debt restructuring is “neither necessary nor desirable.”
Greece’s debt has exploded to around 340 billion euros ($490 billion) and speculation is rife that the recession-hit eurozone member will seek a way to ease its repayments before long.
In London on Monday, the euro changed hands at $1.4332 against $1.4431 late in New York on Friday, at 118.72 yen (119.93), £0.8811 (0.8840) and 1.2843 Swiss francs (1.2874).
The dollar stood at 82.84 yen (83.09) and 0.8960 Swiss francs (0.8920).
The pound was at $1.6264 (1.6318).
On the London Bullion Market, the price of gold rose to $1,485.20 an ounce from $1,476.75 late Friday.