6 Days to Save the Euro Exchange Rate

April 10, 2015 - Written by John Cameron

STORY LINK 6 Days to Save the Euro Exchange Rate

Yesterday’s comments from a European Union official will have sent a chill down the spine of investors holding euro-dominated assets.

The unnamed EU suit starkly warned that, ‘if you take into account weekends and Orthodox Easter, there are only six days left,’ for Greece and the EU to agree on a re-jigged bail-out plan. Incredibly the euro still managed to strengthen slightly against the Pound Sterling (currency:GBP) in spite of these words.

However, the shared currency gave up over half a percentage point of its value against the US Dollar (currency:USD) in spite of the clear danger that Greece will not come up with a raft of reforms which the eurogroup of Finance Ministers deem suitable.
Meanwhile, the latest gambit by Greece’s newly-elected hard-line left wing leadership in the protracted discussions saw Finance Minister Yanis Varoufakis apparently set to one side his Marxist / Leninist tendencies and state that his government is now willing to countenance a re-starting of the privatisation of public sector businesses. Varoufakis told assembled members of the press that,

‘What we are saying is the Greek state does not have the capacity to develop public assets. We want private-public joint ventures.... we want to retain a stake for the state so as to have an income stream with which to finance pension funds.’
This concession addresses one of the major sticking points between Athens and Brussels but there are many more which have the potential to see Greece have the rug pulled from under its public finances.

There was some good news on the day yesterday when an official Greek Government Spokesmen confirmed that the debt-addled Hellenic state had met its latest deadline for the repayment of it emergency bail-out loan from the International Monetary Fund. The official assured the world that the €460m instalment had been paid, alleviating the potential for an all-out Greek debt melt-down – for this week, at least.

However, with Greece’s leader Alexis Tsipras openly admitting that without an extension to its EU bail-out loan, his nation’s coffers will run dry before the middle part of the Summer, the euro (currency:EUR) is still forecast to trade on a firmly negative footing moving forward.

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