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Currency Analyst since 2010

Portugal: political crisis

Portugal is going through the worst political crisis since it accepted an international bailout 2 years ago.

On Tuesday Portuguese Finance Minister Vitor Gaspar announced his resignation. Today the nation’s Foreign Minister Paulo Portas resigned as well.

Portuguese 10-year bond yields rose more than a percentage point to 7.88% amid fears Mr. Portas’s Democratic and Social Center Party will withdraw its support for the government. Portugal's benchmark equity index, the PSI at the open -20, fell by more than 6%, Spanish IBEX slid by 3%. Germany’s DAX index went down by 1.8%.

Political problems increase the uncertainty surrounding Portugal's bailout commitments and the risk of spillover effects into Spanish bonds and Italian bonds hampering the recent recovery.

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