Catalan independence referendum: Euro falls after region votes for secession from Spain
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Version 0 of 1. The euro fell against a host of currencies on Monday, after Catalonia overwhelmingly voted for independence from Spain in a referendum marred by violence. In morning trading, the euro was down around 0.6 per cent against the dollar, at around $1.174, close to its lowest levels since mid-August. It also fell to its lowest level against the Swiss franc in around three weeks. The franc is often bought during times of political and economic uncertainty. “The Catalan referendum looks set to start a new phase of political instability for the EU,” said Josh Mahony, a market analyst at IG. He said that the violent clashed between protestors and police that marred the vote would be “unlikely to do anything other than strengthen the resolve of those seeking independence”. Mr Mahony pointed out that Catalonia is the “richest Spanish region and so there is good reason for the central government to want to quash any process which could lead to a breakup of the country”. “The outcome of this process will potentially have implications closer to home too, with backers of Scottish independence watching closely,” he added. The euro was already dealt a blow at the end of September when Germany’s election highlighted a surge in support for the far-right party, even though Angela Merkel convincingly scored a fourth term in office. Strategist at Deutsche Bank wrote in a note to clients that while it’s unclear what the immediate macro-economic impact of the vote in Catalonia would be, it is “another example that politics is getting more extreme across the world”. |