Yesterday we reported on the resignation of Portuguese Finance Minister Vitor Gaspar.
In his resignation letter to the Prime Minister Gasper cited his failure to reach debt and public deficit targets as well as divided opinion over his austerity measures as reasons for his stepping down.
And now Portugal’s government has lost another prominent figure.
Foreign Affairs Minister Paulo Portas, leader of junior coalition party CDS, has abandoned his post as a form of protest against fiscal policy and the appointment of Secretary of State for Treasury Maria Luis Albuquerque as Gasper’s replacement.
The situation could be perceived as rats deserting a sinking ship, but Portuguese Prime Minister Pedro Passos Coelho is determined to keep his government united – or what remains of it at least.
During a televised speech Passos Coelho asserted: ‘In the next few hours I will try to clarify and guarantee with the CDS party all the conditions for the stability of the government and to proceed with the strategy of overcoming the nation’s crisis. Whatever the differences that are at the base of this crisis, we will know how to overcome them in the name of the national interest.’
With Portugal due to undergo an economic assessment with its creditors in less than two weeks the timing of this political fracas could hardly be worse.
As industry experts Harvinder Sian and Michael Michaelides comment: ‘Any government collapse will come at an unfortunate time in terms of being able to deal with the next budget target miss. A minority government buys time but this is unlikely to solve much in terms of market credibility.’
The Euro was little changed against the Pound this morning but was trading below 1.30 against the US Dollar.
Movement in the EUR/GBP pairing is likely to occur today in response to UK services PMI, German and Eurozone services PMI and Eurozone retail sales figures.
Euro (EUR) Exchange Rates
As of 08:50
The Euro/US Dollar Exchange Rate is currently in the region of: 1.2958 <
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8563 <
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4306 >
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6800 >
The Euro/ Canadian Dollar Exchange Rate is currently in the region of: 1.3669 <