Euro Slides After Sudden Resignation of France’s New Prime Minister
The euro dropped sharply against the U.S. dollar on Monday after France’s new Prime Minister, Sebastien Lecornu, unexpectedly resigned.
By 09:38 GMT (05:38 ET), the euro was down 0.7% to $1.1664, marking one of its steepest daily declines in weeks. French stocks also opened lower as investors reacted to the political shock in Paris.
Lecornu, a close ally of President Emmanuel Macron, was appointed only last month. His departure follows intense criticism from both supporters and opponents over his newly formed cabinet.
Despite weeks of negotiations, Lecornu’s ministerial choices triggered strong reactions across the political spectrum. Many argued his lineup was either too conservative or too moderate, sparking doubts about the stability of the government.
The Elysee Palace confirmed in a statement, cited by Reuters, that Lecornu had submitted his government’s resignation, which President Macron accepted.
France’s parliament remains deeply divided, with no party holding a clear majority. Macron’s earlier decision to call a snap election in 2024 has further fueled political uncertainty. Lecornu’s resignation marks Macron’s fifth prime ministerial change in just two years, highlighting ongoing instability in the French government.
Japanese Yen Weakens as Markets React to Political Shifts
In Asia, most currencies traded cautiously amid concerns over the ongoing U.S. government shutdown. The Japanese yen fell to its lowest level in five months after Sanae Takaichi won the Liberal Democratic Party (LDP) leadership race, signaling continued support for Japan’s ultra-loose monetary policy.
Takaichi, a long-time advocate of Abenomics-style policies, secured 54.25% of the vote in Saturday’s runoff. She is expected to become Japan’s first female prime minister once parliament confirms her appointment in mid-October.
Her victory suggests Japan could see more government spending and a slower pace of monetary tightening by the Bank of Japan. Following the news, the USD/JPY pair surged 2.0% to 150.45, while Japanese government bonds sold off and long-term yields rose on expectations of increased fiscal stimulus.
Meanwhile, the U.S. Dollar Index—which tracks the greenback against major global currencies—rose 0.7% to 98.41, strengthening the dollar’s position in global markets.
