International stock markets fall on fears eurozone debts may spread.
Euro was up 5.66 centimes (by 1.3 per cent) since Monday to RON 4.2838, according to central bank BNR, hitting a record high value this year. The Swiss Franc also hit new record of 3.6921 units, following international investors’ reaction to an escalation of fears of a possible sovereign debt crisis in Italy and Spain.
Annalists warn exchange rate could reach even 4.4—4.5 RON to the EUR unless European leaders come up with solutions. Romania might be hurt in the likelihood of Spain, Italy derailment, a central Bank official warns.
At the same time, the BNR -calculated USD exchange rate rose by 8.73 centimes from RON 2.9921/USD to RON 3.0794/USD, the maximum value since February.
Eurozone finance ministers said they are ready to do more to reduce the risk of the crisis spreading. German Chancellor Angela Merkel urges Italy to make budget cuts.
European shares have fallen further on concerns that the debt crisis in the eurozone may spread to Italy and Spain, BBC News reports. Italy’s main index was down 0.2% in lunchtime trading after earlier being 4% lower. Spanish shares had lost 1.4%, while the UK’s FTSE 100 had shed 1.3%. The yields on Italian and Spanish bonds also continued to rise as worries over the two countries grew.
Italy’s Finance Minister, Giulio Tremonti has proposed EUR 48 bln in budget cuts over three years.
Markets were unsettled by remarks from Prime Minister Silvio Berlusconi, who indicated in a newspaper interview that the austerity plan might not have full cabinet support.
Meanwhile yesterday, yields on 10-year bonds issued by the Spanish government rose to 6.3%, from 6.1%.
Speaking from Washington, IMF managing director Christine Lagarde said it was not yet ready to discuss terms for a second Greek bail-out.
