TNA Reporter, Sapa-AFP and Reuters
World markets were rattled yesterday amid concern over the French Socialist challenger who beat Nicolas Sarkozy in the first round of the nation’s presidential election and the lingering eurozone financial crisis.
The euro lost ground against the dollar and yen in Asia yesterday. The euro inched down to $1.3193 (R11) and 107.33 (R10.40) in Tokyo afternoon trade from $1.3216 and 107.77 in New York late Friday.
The dollar fell to 81.34 from 81.52.
The rand weakened against the dollar as it tracked the euro, with ¬European countries coming under pressure from other world powers to do more to fix debt-heavy economies in the region.
European shares also fell sharply during the day. Investors rushed for safety in early trade, which pushed bond yields in indebted peripherals such as Spain up towards the 6% level.
The euro’s fall came as Francois Hollande won 28.56% of the vote in the first round of France’s presidential election on Sunday, beating incumbent Sarkozy’s 27.07%, with attention now turning to a May 6 run-off vote.
In the Netherlands, seen as a more stable member of the eurozone, the ¬government failed to agree on budget cuts, making elections almost ¬unavoidable and casting doubt on its support for future eurozone measures.
Both the French and Dutch ¬political situations are seen as potentially ¬hampering efforts to stem Europe’s debt crisis.
“It’s beginning to look like the perfect storm,” said Stewart Richardson, chief investment officer at RMG. A leftward lurch in policy for France would be a pretty bad step for Europe.
“There is concern that the policies (Hollande) has been promoting could create friction between other major nations, including Germany,” said Masafumi Yamamoto, chief forex strategist at Barclays Capital in Tokyo.
He said the euro might fall further if Hollande became France’s new leader.