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Currency Exchange Weekly report- 27th jan to 3rd february 2012: Big uncertainty on Greece bailout

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Eurozone finance ministers told Greece on Saturday it could not go ahead with an agreed deal to restructure privately-held debt until it guaranteed it would implement reforms needed to secure a second financing package from the euro zone and the IMF. Greek Prime Minister Lucas Papademos faces a critical task of convincing international lenders and political party leaders on Sunday to agree to the stringent terms of a 130 billion euro rescue plan to stave off looming default.

Athens has wrangled without success for weeks with lenders and private bondholders on the bailout package and a debt restructuring plan, putting itself dangerously close to bankruptcy as 14.5 billion euros of debt falls due in mid-March. The debt swap and bailout was designed to bring Greece’s debt down to the targeted 120 pct of GDP level by 2020, but with Greece’s economic prospects deteriorating, fears have grown that European partners will need to stump up more money, if Greece stays in the euro of course…

In the U.S, Mitt Romney won the Republican presidential primary in Florida by a wide margin, taking 46% of the vote to Newt Gingrich’s 32%. Mr Romney’s victory goes some way to restoring his status as the party’s “inevitable” candidate. America’s economy grew by a robust 2.8% in the final quarter of 2011, according to a first official estimate, the country’s quickest pace of growth since mid-2010.

The euro has been stable this week against the dollar due to strong equities maarkets with america  and BRIC countries leading economic growth versus an uncertain Europe. The euro was lower against sterling, and the swiss franc as investors are again looking ofr safe- haven currencies on concerns over Greece. The Swiss franc reached 1.0231 against the euro on the 1st of February, the strongest level since September, when the Swiss National Bank said it would cap the franc at 1.20 per euro.

Have a nice week-end


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