08.05.2012
By Simon Miller
The euro fell below the psychological level of $1.30 today after the leader of the Greek Left Coalition party said the country's committment to an EU/IMF rescue deal had become null and void.
As European markets closed, the euro was €1.24 against the pound and €1.302 against the dollar as markets absorbed the political fallout of Sunday's French presidential election and the continuing efforts to form a coaltion in Greece.
The euro had hit a session low of $1.2988 over fears that the austerity programme set up by the troika of the International Monetary Fund, the EU and the European Central Bank will be rejected by the Greek government if a coalition is formed. Even worse are fears that the Greeks would go back to the polls again, firmly rejecting the programme.
Alexis Tsipras, head of a Radical Left group that is part of coalition talks commented: "There is no way we will sneak back in again what the Greek people threw out in the election."
The fear is that Greece's bailout is conditional on the austerity programme and if rejected could lead to bankruptcy and its exit from the euro.
Meanwhile, markets await on what plans French president-elect Francois Hollande has following his advocating of a growth plan rather than the German-favoured fiscal austerity.
Even so, European markets continued their morning falls with the FTSE 100 closing 1.78% down at 5,554.55 while the CAC 40 closed down 2.78% at 3,124.80 and the Euro Stoxx 50 fell 2.78% to 2,234.94.
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