Global Share Markets And The Pound To US Dollar Exchange Rate Slump, As Fears Of Greek Debt Default Return

Published: Wednesday, 7 March 2012 09:00 BST - Written by Minesh Chaudhari

STORY LINK Global Share Markets And The Pound To US Dollar Exchange Rate Slump, As Fears Of Greek Debt Default Return

The GBP to USD exchange rate is 1.5707.

Global stock markets took an absolute beating during yesterday’s session in the currency markets, as appetite for risk amongst the international investment community evaporated.

This saw London’s FTSE 100 lose almost 2% of its value on the day, whilst the broader-ranging FTSE 250 index closed down by 2.37%. Frankfurt’s Dax lost even more ground, closing down by 3.40% and the Paris Cac 40 shipped a similar amount.

The scramble for safety from market participants was triggered by renewed fears over the febrile state of Greece’s debt-burdened finances. This time, concerns centred on the much-vaunted ‘haircut’ which private investors are being asked to take on Greek debts. The deadline for creditors holding Greek bonds to accept a swap for new debts paying a lower rate of return is tomorrow. Any last minute brinkmanship from these institutions could see Greece failing on its debt commitments and plunging to a catastrophic default.

For this reason, shares in eurozone retail banks were particularly out of favour yesterday, with Societe Generale, BNP Paribas and Commerzbank all losing roughly 6% of their value on the day.

The mood among the investment community was already gloomy, as fears escalated that Western states are revving themselves up for a bout of ‘direct intervention’ against Iran. These fears were heightened by images of Israeli Prime Minister Benjamin Netanyahu apparently ‘cosying up’ to US President Barack Obama during his visit to the States this week.

Yesterday’s flight to quality saw the safe-haven Japanese Yen and US Dollar strongly supported in the markets, while the high-yielding Australian and New Zealand Dollars were friendless. This state of affairs is likely to continue at least until tomorrow, when Greece should avoid default for the umpteenth time.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: American Dollar Forecasts Australian Dollar Forecasts Daily Currency Forecasts