Euro to US Dollar (EUR/USD) Exchange Rate Tumbles as Ukraine Worries Spook Investors
The Euro declined to its lowest-level in a week against the US Dollar and fell against the majority of its other major peers as investors grew increasingly worried that Ukraine will fall into civil war.
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Concerns over the situation in Ukraine escalated on Friday after Pro-Russian separatists in Donetsk said that they will push on with holding a referendum on independence on Sunday.
The rebels said that the vote will go ahead despite Russian President Vladimir Putin urging for a delay. Some observers say that such a move will hasten Ukraine’s decent into civil war.
Clashes in the eastern town of Mariupol left several people dead as Ukrainian forces attacked rebel positions. Ukrainian tanks drove down the towns streets.
The Euro also came under pressure after European Commission President Manuel Barroso said that the EU is still struggling to agree on the best way to tackle the Eurozone’s economic crisis.
He added that the Ukraine situation was the biggest threat to European security since the fall of the Soviet Union.
Investor sentiment towards the Euro is also under pressure from yesterday’s comments made by ECB President Mario Draghi who said that the Bank was prepared to introduce new monetary easing measures in June.
“The takeaway from the ECB meeting is largely that they’ve been known to not pre-commit, but this is as close to pre-committing to a rate cut as they can, It’s largely predicated on using Euro as a policy tool for easing monetary conditions,” said a strategist at Credit Agricole SA.
Data which showed that German exports and imports fell in March also weighed heavily.
Currently the Euro is trading against the Pound in the region of 0.8178 and is trading against the US Dollar in the region of 1.3786.