After the resounding ??non?? by France, it was the turn of the Netherlands to come out of the exit poll with another firm rejection of the European Constitution. Such a slam of the referendum raised serious concerns about the economic reform in the region. The exit poll showed that 63 percent of the total votes voted no compared to only 37 percent in the ?yes? camp. According to a survey, only 62 percent of the Dutch electorate cast ballots. The market reacted immediately as the euro started a firm decline to $ 1.2160. Automatic sell orders were triggered below $ 1.22.

The euro decline accelerated as investors rushed to get rid of their long positions. The turnout was bigger than initially expected and the rejection stunned the voters itself. As if the european currency was not sick enough, the euro got another hit upside the head after an Italian Welfare minister, Minister Roberto Maroni, said that Italy should quit the single currency and revert back to the lira. As all hell broke loose for the euro, the German central bank had to intervene to refute a report that the EMU, the cradle of the euro, was on the verge of collapsing. In addition, the european Central Bank president, Jean ? Claude Trichet gave the euro a breath of fresh air by quelling an imminent rate cut in the euro zone interest rates. The resilient dollar, on the other hand, was seen shrugging off a weak US jobs report that indicated that payroll grew by only 78,000 in May as opposed to 185,000 as initially forecasted by economists.

Against the Mauritian rupee, the euro was trading at MUR 36.27 as compared with MUR 36.56 a week earlier.

The sterling edged higher against the waning euro and managed to come off this week?s 7-1/2 month low against the greenback. In the absence of strong domestic data, the pound traced the euro movements amid concerns about political and economic stability in the euro zone. The pound gathered support from the Bank of England?s reports that stated that both British Consumer Credit and growth in mortgage lending went up slightly. In addition, data showed that the housing market had stabilized with mortgage lending up 7.3 billion pounds, more than the 6.8 billion expected.

Yesterday, the pound was trading at MUR 53.91 as against MUR 53.47 last TuesdayThe Japanese yen moved little last week as China?s central bank official stated that Beijing would reform its foreign Currency regime while reiterating that outside pressure by foreign nations would not make the revaluation of the yuan any sooner. Yesterday, the Japanese currency was offered at MUR 27.66 as compared to previous Tuesday?s 27.41.

Major data-events this week:

■ Wednesday 08 June US Mortgage Indx ■ Thursday 09 June Gr CPI final ■ Friday 10 June Fr Trade Bal?ce US Intl? trade, Fed Budget ■ Monday 13 June ■ Tuesday 14 June US Retail sales, PPI

Contribution by HSBC