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September 19th 2005

Euro Plunges due to political deadlock

The German elections are now history, and any prospects for economic reform are all but lost. Most political commentators agree that the near-split between Merkel and Schroeder represents the worst-case scenario for Germany, from the perspective of reform. In fact, it is still unclear as to who the official Chancellor of Germany is, as both candidates have separately claimed victory. Regardless of who ultimately prevails, it seems the most plausible outcome will be a sort of ‘grand coalition,’ in which several parties share power. In any event, Germany will likely fail to achieve meaningful economic reforms. Fundamental and technical analysts alike have already proclaimed the Euro will suffer. The Financial Times reports:

The euro was pummelled by investors as political chaos loomed in Germany after the weekend election failed to provide a clear winner. The euro sank to a low of $1.2101, a decline of about 1.6 per cent from Friday’s intra-day high.

Read More: Euro falls as German political chaos looms

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Posted by Adam Kritzer | in Euro, Politics & Policy | No Comments »

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