Euro Breaks Clearly Below Dollar Parity on Italian Govt Breakdown Fears
2022.07.14 17:23
By Geoffrey Smith
Investing.com — The euro broke firmly below parity against the dollar on Thursday, as the government of Italian Prime Minister Mario Draghi appeared on the verge of collapse.
By 10 AM ET (1400 GMT), the euro was trading at $0.9978, down 0.8% on the day and just off a new 20-year low of $0.9952.
Draghi’s broad coalition had earlier won a vote of confidence in the Senate, as expected, but had lost one of its most important members in the process, as the 5 Stars Movement (M5S) carried out its threat to abstain.
Draghi, widely seen in financial markets as the guarantor of economic stability but lacking any popular mandate of his own, had said beforehand that he would offer his resignation if M5S didn’t vote for the motion.
M5S has already split in two over a government economic policy that is under immense strain due to the conflict in Ukraine. The leader of the remaining M5S, former premier Giuseppe Conte, had said meanwhile that he couldn’t endorse the government’s lack of support measures for those struggling with the surge in the cost of living.
Draghi has already arrived at the Quirinale Palace to meet with President Sergio Mattarella, who has numerous options available to him. These include inviting Draghi to form a new government on a narrower basis – something that appears unlikely – and calling new elections, which would otherwise not be due until 2023.
