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Concern spreads to the European economy and the euro falls against the dollar

2023-03-15T13:18:53.318Z


The currency took a nosedive on Wednesday due to the plunge in banking stocks in Europe. The euro and other major European currencies nosedived Wednesday against the dollar, weighed down by the plunge in banking stocks in Europe while the largest shareholder of the bank Credit Suisse ruled out increasing its capital. The risk weighing on the banking sector, on the eve of a meeting of the European Central Bank (ECB), caused the euro to lose 1.24% to 1.0599 dollars around 11:25 a.m. GMT


The euro and other major European currencies nosedived Wednesday against the dollar, weighed down by the plunge in banking stocks in Europe while the largest shareholder of the bank Credit Suisse ruled out increasing its capital.

The risk weighing on the banking sector, on the eve of a meeting of the European Central Bank (ECB), caused the euro to lose 1.24% to 1.0599 dollars around 11:25 a.m. GMT (12:25 p.m. in Paris), while the Swiss franc fell 1.22% to 0.9255 Swiss francs to the dollar.

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Concerns focus in particular on Credit Suisse.

Its main shareholder, the Saudi National Bank, will “absolutely not” support the Swiss bank by increasing its capital, its president Ammar al-Khudairy explained in an interview with Bloomberg TV.

After the bankruptcy of the American bank Silicon Valley Bank (SVB), "

it seems that more and more investors are looking to CS (Credit Suisse, editor's note) as the next most likely domino

", comments Neil Wilson, analyst at Finalto .

As a result, the price of the Swiss bank plunged on the stock market.

For the foreign exchange market, the question is how the ECB will react at its meeting, while the banking sector's setbacks are due to a painful adjustment to higher rates.

"

The ECB had promised to raise rates by 50 basis points tomorrow, but that will not be enough to support the euro if concerns about the health of the financial system dominate

," commented Jane Foley, analyst at Rabobank.

On the other side of the Atlantic and since Tuesday's inflation data in the United States, investors now expect the United States Federal Reserve (Fed), which will meet next week, to hike rates .

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"

The market, and he's right in our view, is now pricing in a 25 basis point hike at the Fed's monetary policy committee meeting next week," which

benefits the dollar, notes Derek Halpenny, an analyst at MUFG.

On Wednesday, investors will also keep an eye on the United Kingdom where the Minister of Finance is to present his budget.

But the announcements should be "

rather bland, with no major change in fiscal policy expected, unlike the 'mini-budget' of September 2022

", made up of ultra-costly measures and which had caused the pound to plunge to its all-time low, comments Carol Kong, analyst at CBA.

The pound lost 0.71% to 1.2071 dollars.

Source: lefigaro

All news articles on 2023-03-15

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