The euro weakened sharply against the dollar on Monday following the unexpected resignation of France’s newly appointed Prime Minister, Sébastien Lecornu.
By 05:38 ET (09:38 GMT), the single currency had fallen about 0.7% to $1.1664, while French equities also tumbled in reaction to the political upheaval.
Lecornu — a close ally of President Emmanuel Macron who had been appointed just last month — stepped down amid widespread criticism from both supporters and opponents over his newly unveiled cabinet.
Although his government lineup was finalized after weeks of negotiations, Lecornu’s ministerial choices sparked backlash from multiple sides. Critics argued that his selections were either too conservative or not sufficiently aligned with Macron’s broader centrist agenda, casting doubt on the government’s stability at a time when France’s parliament remains deeply divided and lacking a clear majority.
In a statement quoted by Reuters, the Elysée Palace confirmed that Lecornu had submitted “the resignation of his Government to the President of the Republic, who has accepted it.”
The departure marks another setback for Macron, who has struggled to maintain political cohesion since calling an early parliamentary election in 2024, an event that further fragmented France’s legislature and ushered in a period of heightened instability. Lecornu was Macron’s fifth prime minister in just two years, underscoring the volatility within his administration.
Yen Plunges on Hopes of Continued Loose Policy Under New LDP Leader
Across Asia, most regional currencies traded quietly as investors remained cautious amid the ongoing U.S. government shutdown, while the Japanese yen posted its steepest drop against the dollar in five months following the victory of Sanae Takaichi in Japan’s ruling party leadership race — a result seen as a win for continued monetary easing.
Takaichi, a conservative lawmaker and long-time supporter of expansionary “Abenomics”-style policies, won the Liberal Democratic Party (LDP) runoff on Saturday with 54.25% of the vote.
She is expected to be formally confirmed as prime minister in mid-October, pending parliamentary approval, which would make her Japan’s first female prime minister.
Takaichi’s victory is expected to pave the way for greater fiscal spending, potentially reducing pressure on the Bank of Japan to tighten policy anytime soon.
The USD/JPY pair surged 2.0% to 150.45, reflecting the yen’s sharp decline.
Japanese government bonds also sold off heavily, with long-term yields rising, as traders anticipated increased bond issuance to finance new stimulus measures.
Meanwhile, the U.S. Dollar Index, which tracks the greenback’s performance against a basket of major currencies, rose 0.7% to 98.41.
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