Euro hits 17-month low amid France debt fears and Spain election uncertainty

The euro hit a 17-month low against the US dollar on Monday, driven by rising concerns over France’s growing public debt and a sharp sell-off in government bonds. The European currency dropped as much as 0.9% during trading, marking its fourth straight week of declines against the dollar. The exchange rate now stands at around US$1.12 per euro.

France’s public finances are under intense scrutiny, with the yield on its benchmark 10-year government bonds nearing 5%, a multi-decade high. This increase in bond yields translates to higher borrowing costs for the French government and could eventually raise consumer borrowing costs for mortgages and loans.

Adding to the market volatility, Spain announced a snap election on Monday, further fueling uncertainty across the eurozone. The euro has also weakened against the British pound, falling to approximately 85p. This decline marks the euro’s lowest level against the US dollar since May 2022.

The combination of rising debt concerns and political instability has weighed heavily on the euro, raising questions about the currency’s stability in the near term.