“Foreign-exchange strategists are convinced that Italy’s new government will maintain austerity measures that preserved the currency union during the region’s sovereign crisis even as the euro tumbles from a 14-month high.
Analysts raised their second-quarter forecasts for the 17- nation currency to $1.32 from $1.28 at the end of December as Italy’s Feb. 24-25 election ended without a clear winner, according to the median of more than 60 estimates in a Bloomberg News survey. That 3.1 percent increase is the second-biggest among the Group of 10 currencies after the Swedish krona.
While traders pushed the euro down to $1.3018 today from this year’s high $1.3711 on Feb. 1 as anti-austerity parties led by three-time premier Silvio Berlusconi and former comedian Beppe Grillo won blocking minorities in the Senate, strategists are looking to the debt markets. Italy’s borrowing costs have fallen from a three-month high on Feb. 27 as European Central Bank President Mario Draghi said his untapped bond-buying program, known as Outright Monetary Transactions, remains in place as an “effective” backstop…..”
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