Euro Falls on Sudden German Ban

Wednesday morning and once again European markets followed the Asian trend and continued to sell the euro.

Today’s main reason for risk aversion away from the euro was an abrupt decision by the German authorities to introduce an immediate ban on “naked” short selling of some securities, principally euro government bonds.  The ban will take effect until March 2011.

The sudden decision to limit this rather risky practise, whereby an investor doesn’t even borrow a  falling security before selling it on, left investors wondering what was making the Germans so jumpy?

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