Cyprus Bailout Weighs on Euro
The euro slipped over the weekend and recovered only slightly on Monday morning, trading at 1.3383 at 8:30 GMT. The currency was under heavy pressure after political uncertainty threatened to throw the recent recovery efforts off track in both Spain and Italy, two of the region's most fragile economies.
Spanish Prime Minister Mariano Rajoy has been accused of taking part in an illegal cash payment scheme, causing many to call for his resignation. Spain has been teetering on the edge of a full sovereign bailout for months, and Rajoy's scandal has served to fuel doubts about the country's stability.
Italian elections at the end of February are also putting pressure on the euro as former Prime Minister Silvio Berlusconi moved ahead in the polls over the past week. Berlusconi's first term as Prime Minister ended disastrously, causing some to wonder if the Italian government will crumble if he is re-elected.
On Monday eurozone finance ministers will meet to discuss the dark cloud hanging over the currency; Cyprus' bailout package. The island nation is under scrutiny as many allege the country's debt was linked to tax fraud and Russian billionaires' deposits. Amid the controversy, eurozone leaders have not been able to reach an agreement regarding a bailout package.
According to Businessweek, the failure to reach a deal has many wondering if the country will fall and undo the eurozone's recent progress.
Going into the meeting, the ministers are hopeful to reach a solution and continue to move forward with crisis management in the region. Although most regard 2012 as a turning point for the currency, weakness in the eurozone's real economy has shown the crisis is far from over.
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