SPAIN: MADRID: PESETA IS DEVALUED

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• published: 21 Jul 2015
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English/Nat Financial markets in Madrid were in turmoil today (Monday) as dealers tried to cope with the devaluation of the Spanish peseta. The peseta was devalued 7 per cent and the Portuguese escudo by 3.5 per cent early Monday following an 11-hour emergency meeting of the EU's Monetary Committee called at Madrid's request. Today's devaluation of the peseta came after two weeks of pounding on currency markets, threatening to send it to the floor of the value allowed within the European Union's Exchange Rate Mechanism (E-R-M). Early Monday, the peseta was devalued by 7 per cent and the escudo by 3.5 per cent in a realignment within the E-R-M. In Madrid this morning, dealers were hoping the peseta would stabilise shortly. SOUNDBITE: "Well apparently it's going to be very important to see what happens in the first two or three days of this week. Right now I should say that we are in a perfect "take-in" period and that probably the peseta should recover a little bit during the first days of this week, but I must tell you that after that I assume that the pressure against the peseta will keep on as the main factors against the peseta have not really disappeared at all". SUPER CAPTION: Borja Murube - Chief Dealer, Natwest (Madrid) Ten of the 15 EU states make up the European Monetary System, which links exchange rates of EU currencies in preparation for achieving a single EU currency by the end of the decade. This is the fourth time the peseta has been devalued since 1992. It's a further blow for the Socialist government of Felipe Gonzalez, a staunch defender of monetary union in the EU. Today's devaluation highlighted Spain's trouble in meeting the EU targets necessary for a single currency. Financiers are also blaming the political turmoil in Spain for the peseta's poor performance and fear the crisis among the European currencies could continue, with further pressure on the peseta. SOUNDBITE: "Well right now I should say that most of the reasons about the peseta weakness are political factors, I cannot begin to say that sounds good at all but you know, these are more or less the same as in other European countries so I should say that the only solution for the peseta at the moment should be if we see a real political change in Spain". SUPER CAPTION: Borja Murube - Chief Dealer, Natwest (Madrid) The devaluations showed the difficulties of the 15-nation EU to keep currencies closely tied for an eventual single currency, and highlighted the gap between stronger and weaker EU economies. Dealers says the devaluations illustrate the risk that Spain and Portugal could lag behind in moves toward the single currency. After two weeks of turmoil for the Iberian currencies, European Union monetary officials are hoping Monday's devaluation of the Spanish peseta and Portuguese escudo would be enough to stave off a full-blown crisis of the EU's monetary system. You can license this story through AP Archive: http://www.aparchive.com/metadata/youtube/240a428a0506d424fcbcacc3de0f8eb4 Find out more about AP Archive: http://www.aparchive.com/HowWeWork