EMU `delay' fears force banks to defend the lira
Jitters that a single currency might be delayed resulted in dealers selling Italian bonds and buying German debt instead. There were repercussions for bonds and currencies across Europe.
Traders said the Bank of Italy and the Bank of Spain both intervened to defend the lira and the peseta against the mark. The lira fell to its lowest level against the mark since rejoining the ERM in November.
Rumours that the Bundesbank was about to announce a two-year delay to EMU were denied by Bundesbank officials. Nevertheless, traders' confidence in a broad-based euro beginning in 1999 continued to fall, and Italy bore the brunt of the market reaction. Italian futures contracts ended 2.29 points down at 127.50. Spanish, Swedish, Finnish and Irish government bonds softened too.
The mark strengthened against the lira and the peseta during the day. Traders said the Bank of Italy intervened when the exchange rate reached 998.50 lira to the mark. The currency fell during the day through the psychological barrier of 1,000 lira per mark to reach 1,001.50, its lowest level since it rejoined the ERM at a central parity of 990 lira to the mark on 25 November last year.
Some dealers suggested that the rumours were begun by traders in an attempt to get the markets moving. But jitters were also fuelled by Bundesbank board member Peter Schmidhuber, who said yesterday morning that "hectic" attempts to meet the deficit criteria were causing only the appearance of convergence.
- 1 Barbarians vs Samoa interrupted by sprinklers as fans criticise lack of Wi-Fi and poor seating at West Ham's Olympic Stadium
- 2 Watch the Supermoon live: How to see the brightest Moon of the year tonight
- 3 Hulk Hogan wants to be Donald Trump's running mate in the US Presidential election
- 4 Blood Moon and Supermoon: September to bring brightest – and dimmest – full Moon of the year on same night
Caitlyn Jenner car crash: Driver who died in collision sued by surviving passengers for $18.5m
Watch the Supermoon live: How to see the brightest Moon of the year tonight
Hulk Hogan wants to be Donald Trump's running mate in the US Presidential election
Blood Moon and Supermoon: September to bring brightest – and dimmest – full Moon of the year on same night
Turkey duped the US, and Isis reaps rewards
Climate change: 2015 will be the hottest year on record 'by a mile', experts say
'Women only' train carriages: Jeremy Corbyn unveils radical move to tackle public harassment
Black holes are a passage to another universe, says Stephen Hawking
Iain Duncan Smith 'should resign over disability benefit death figures', says Jeremy Corbyn
Tony Blair attacks Jeremy Corbyn's 'Alice In Wonderland' politics
Theresa May says migrants should be banned from entering the UK unless they have jobs lined up
iJobs Money & Business
£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...
£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...
£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...
£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...