Euro dives on Italian call to quit EMU

[tritsofme]

TOKYO (Reuters) - The euro suddenly spiked lower on Friday after an Italian minister said that Italy should quit the single currency and revert back to the lira.

Welfare Minister Roberto Maroni told the Repubblica newspaper that Italy should hold a referendum to decide whether to return to its old currency.

That sent the euro tumbling to $1.2220 from $1.2285 in a matter of minutes as the report added to concerns about the European Union's outlook -- politically and economically.

By 0647 GMT, the euro had recovered to around $1.2260, little changed from late U.S. levels.

The single currency slid to 132.30 yen from 132.62 yen on the report.

The euro's fall also boosted the U.S. currency against the yen, which hit the day's high at 108.25 yen

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[The Magistrate]

1. A Quarter Penny Drop, Sir

More mole-hill than mountain, eh?

[tritsofme]

3. A .5% decline in a few minutes

is a pretty big move.

And what was said by the minister is the real big deal, if a situation like that actually came to fruition, the euro would be in for a huge fall.

[Lucky Luciano]

4. Foreign currencies

do not move with the same kind of volatility as stocks do...this is indeed a large move. Also, a lot of people in the FX market are highly leveraged....so a 0.5% move in the currency can mean a 10% move in a futures position if only 5% down was needed for margin.

[Art_from_Ark]

6. Not as volatile as stocks, but

a 0.5% move is no big deal. Heck, the yen has gone up or down by 2 cents (nearly 2%) on some days. Say "Boo!" and traders rush to unload positions.

[bemildred]

7. A "buying opportunity" I would say. nt

[DemExpat]

2. The Dutch are actually happy with a dive for their exports....

but predict a boost before long.
(It has been going down for a while now....)

DemEx

[macllyr]

5. This seems like a plan to make the Euro drop.

Actually, I wonder if this is not a concerted action from the European Commission to make the Euro drop to a more reasonnable level. The drop of the US dollar vs Euro is currently trashing European economy (including Airbus sales). Perhaps it was decided that it was too risky to let the Euro climb to 1.5 USD if the Constitution was adopted in all 25 countries. That would explain the botched way in which the treaty was presented to people and the ridiculous campaign we had in France. Add to that a few declarations like that of R. Maroni and the Euro will be back to 1,10 – 1,15 USD in a few weeks.

Macllyr

[Flagg]

8. This guy is a from a neo-fascist party.

Of course he's against the Euro.

Get some perspective here, people.

[Kellanved]

9. snarf

Who is putting these rumors out?
First the report about Germany laeving the Euro, now Italy - and each and every time the basis of the report is half-cooked BS.

[HuckleB]

10. An over-reaction that didn't last: "Euro recovers from Italy stumble"

Euro recovers from Italy stumble

http://news.moneycentral.msn.com/provider/providerarticle.asp?feed=OBR&Date=20050603&ID=4864824

Recovery signs for weakened euro

http://news.bbc.co.uk/1/hi/business/4605767.stm

[HuckleB]

11. And in the world of reality:

Currencies: Euro recovers losses, ending dollar's rally --
http://www.iht.com/articles/2005/06/02/business/bux.php

And those losses for the dollar were based on false assumptions, as the jobs figure was horrific.