Euro Near $1.30 After Italian Elections End in a Stalemate

The euro dropped following Italian elections as fears about recovery amid an unstable political climate in Italy surfaced. The common currency traded at 1.3062 against the dollar at 6:35 GMT on Tuesday morning as investors looked for a safer alternative in the yen and dollar. After the bulk of votes were counted late on Monday, Pier Luigi Bersani narrowly secured a victory in parliament, allowing his Democratic Party a majority. However, in the Senate the lines were not so clear. According to the Wall Street Journal, although the Democratic Party received the most votes, it was only by one percentage point and did not give the coalition the majority it needed to comply with legislation. The discrepancy has caused many to speculate about the possibility of another vote. Silvio Berlusconi, whose party came in second, has already begun to campaign to have the vote called as a draw. Former comedian Beppe Grillo also garnered quite a few votes, nearly matching that of the mainstream parties. The support for both Berlusconi and Grillo shows Italians are fed up with the current situation, as both candidates ran on promises to do away with much of former Prime Minister Mario Monti's austerity reforms. At the moment, most are worried about the consequences the political stalemate will have on the already financially struggling country. Since Italy is the eurozone's third largest economy, problems there will translate to problems across the board. Some are worried that Italy's apparent rejection of austerity policies will spread to other countries like Spain, undermining current efforts to move forward.