For the euro, Italian budget worries are just the latest cause for concern.
The single currency has been on a steady downward slide since the Spring, falling from $1.25 against the US dollar in the first quarter of this year to about $1.15 now.
Its 2018 peak against sterling was more recent. In the late summer a euro bought about $0.91, against about $0.88 now.
Troubled times in big three eurozone economies
Against the Japanese yen, the euro’s decline more closely mirrors its trading pattern against the dollar, with a peak of 137.205 yen in early February and a decline to about 130.000 now.
It wasn’t supposed to have been this way. For the euro, these were to have been the best of times, with French President Emmanuel Macron, elected in May last year, proposing both radical reform at home, to kick-start one of the eurozone’s big three economies, and a shake-up of the eurozone to give it a more co-ordinated economic government.
But President Macron’s domestic changes seem to have bogged down while the German opposition has stalled his plans for a eurozone finance ministry.
More recently, problems in the other large eurozone economies have weighed in on the single currency.
More immediately, Italy’s coalition of distinctly non-mainstream parties, the right-wing League and the anti-establishment Five Star Movement, is on a collision course with Brussels over the country’s fiscal policy. Its plans to increase deficit spending and allow the annual deficit to rise to 2.4% of gross domestic product (GDP), three times the level planned by the previous, centre-left administration, has brought criticism from the European Commission and a suggestion that Italy’s rating could be downgraded by credit agencies.
Higher US rates pile on the pressure
Neither Standard & Poor’s nor Moody’s have given Italy a treble-A or even single-A rating. The former has Italian debt rated BBB while the latter has it rated Baa2.
Tensions between Brussels and some eastern members of the European Union, notably Hungary, also cast a cloud, although the larger eastern countries Poland, Hungary and the Czech Republic, are not euro members and show no immediate signs of planning to join.
While the European Central Bank is also tightening monetary policy, it is behind the US in this regard.
In addition, slowing international growth and rising trade tensions is curbing demand for European goods, especially those from the eurozone’s powerhouse economy, Germany.
Finally, the Brexit negotiations have heightened fears that Britain would not be the only loser from a failure to strike a deal and that restricted access to one of the largest domestic European markets would be damaging also for eurozone businesses.