BRUSSELS – The euro fell to a 17-month low on Monday as rising French borrowing costs and political uncertainty intensified concerns about financial contagion across the euro area.
Investors have been selling French government bonds while moving into safer German debt. The premium demanded to hold French bonds over German government securities has widened to levels not seen since the eurozone debt crisis of 2010-2012.
France is seeking to pass a 2027 budget aimed at reducing its deficit and containing its record-high debt. The government faces a deeply divided parliament, adding to uncertainty over its fiscal plans.
The pressure on French bonds has also weighed on the common currency. The euro traded below 1.12 dollars, reaching its weakest level in 17 months, according to market data cited by Reuters.
The developments are being closely watched by European policymakers because a prolonged deterioration in French financial conditions could affect borrowing costs and market confidence across the euro area.
Source: Reuters
