The euro fell against the dollar Monday, and Asian stocks slipped, after Italian voters rejected changes to their country’s Constitution designed to speed government decision making and spur Italy’s stagnant economy, NY Times reports.
The vote, and the political and financial turmoil it is likely to provoke, raised fears that Italy would be unable to muster the growth needed to deal with crushing government debt and a shaky banking system. The vote was another sign of popular resistance across Europe to changes that economists say are needed for the eurozone to overcome problems that have threatened its existence.
The political uncertainty caused by a “no” vote will postpone plans to rebuild the Italian banking system and help banks deal with deal with problem loans, which account for 18 percent of the total and are a serious drag on the economy.
The market interest rate, or yield, on Italian government bonds also rose, a sign that investors now consider the country to be a riskier place to put their money. Spanish and Portuguese yields also rose.
Initial market reaction to the vote was muted because investors had anticipated the result based on polls and had already adjusted their portfolios. Still, the euro slipped more than a cent against the dollar in early trading, and most Asian stock markets were slightly down. The Shanghai Composite index fell 1.1 percent, and the Nikkei 225 Index in Japan fell 0.9 percent.