Is The Lira Becoming The Peso Of Europe?

The economies of Italy and Mexico don't have much in common. Italy, after all, is an export powerhouse and a full partner in the Group of Seven, representing the world's most powerful economies. But when the Milan stock exchange caved in and the Italian lira plummeted almost 6% against the dollar and the German mark on Mar. 17, Italians and other Europeans began to wonder whether a Mexican-style meltdown might be possible in Europe. A collapse of the lira would rock Europe's trading system and ratchet up pressure on other currencies, including Spain's peseta and the French franc.

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