Italian finance minister reassures investors with pledge to stay in euro

Jasper Jolly
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Comments from Giovanni Tria (right) reassured markets (Source: Getty)

Investors rushed back to Italian assets today after the populist government’s new finance minister vowed to keep the nation in the Eurozone, reassuring investors who had feared an exit by one of the single currency’s largest economies.

Giovanni Tria, the newly appointed finance minister, said the position of the government was “clear and unanimous” in favour of the euro, in an interview published yesterday with Italian newspaper Corriere della Sera.

The yield on Italian government debt fell sharply in morning trading today in response, as relieved investors bought up bonds.

Read more: With Italy in chaos, is the Eurozone on the verge of another crisis?

The yield on the benchmark 10-year government bond, which moves inversely to price, rose by 0.21 percentage points, narrowing the premium paid relative to German debt to just over 2.4 percentage points at the time of writing.

The euro gained ground over the course of the day to reach highs of $1.182 against the US dollar, before paring some gains.

Italian bond yields surged last month as investors feared political crisis could result in a repeat election with Italy’s membership of the euro a key issue. However, the two populist parties with the majority of votes between them, the far-right Northern League and the anti-establishment Five Star Movement, managed to form a coalition headed by Prime Minister Giuseppe Conte.

Read more: Italian anti-establishment leaders resurrect coalition

While prominent members of the coalition – notably including League leader Matteo Salvini – have in the past said they want to dump the euro, Tria’s comments appear to put the matter to rest, at least temporarily.

“There is no question of going out of the euro,” Tria said. “The government is determined to prevent the emergence of market conditions that lead to exit.”

Tria was emphatic that the coalition will not try to engineer an exit from the euro by the back door.

He said: “It is not just that we do not want to go out: we will act in such a way that conditions are not approached that could call into question our presence in the euro.”

Read more: Italian political crisis spooks Europe

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