Euro began to fall again

Baku. 5 December. REPORT.AZ/ At the referendum in Italy yesterday, people did not support a package of reforms proposed by the current prime minister Matteo Renzi. 

Report informs, 59% of the population voted against the reforms. This had a negative impact on the euro. Thus, investors fearing populism, disintegration and collapse of the financial system began to sell the euro. Notably, at present, banks in Italy are in very difficult financial situation and they need recapitalization. The volume of problem loans reached 360 billion euro. The market price of commercial banks dropped by half since the beginning of the year, and analysts predict that it is not the end.

Analytical Group of Report informs, negative results of the referendum caused a decrease of 1.4% in the euro exchange rate from 1.0650 USD/EUR to 1.05 USD/EUR.Financial markets are confident that, next week, on December 13-14, the US Federal Reserve System (FRS), will increase discount rate and news from Italy has reduced the euro to the minimum level of the last 1.5 years. Notably, USD/EUR exchange rate was at 12-year minimum (1.0456 USD/EUR) on March 16, 2015. If rates fell below this level it soon will reach parity or even fall a bit.

Analytical Group of Report don't exclude parity in 2017. After Fed's raising discount rates, euro may further increase and temporarily reach 1.08 USD/EUR.