Corporate foreign exchange news
Greek reality takes a bite of the currency market
Wednesday, 22 February 2012 09:02:11 GMT
Stiff reality over the austerity measures required in Greece has left a cold child over currency markets worldwide, as commodity-exporting nations and speculative countries were hit by a lack of investor confidence.
Greece talks finally came to a conclusion yesterday as a 130 billion-euro bailout was agreed. However, there was relatively little cheer over the outcome, as the euro zone's two-year debt crisis has seen too many false dawns. The program was met with great uncertainty, with many experts asking not whether it will fall through but when it will fall through.
There was also concern over other countries in Europe, with many believing that Greece may not be the last country to fall foul of the debt crisis.
Sony Kapoor, managing director of Re-Define, told the Wall Street Journal: "While Greece is in a worse shape than any other euro-area country, the austerity-driven deep recession, collapse of business and consumer confidence, testing of the social fabric and dysfunctional politics seen there could all rear their ugly heads elsewhere."
The currency markets took a hit on the back of this confidence loss, with currencies dropping in Asia, Europe and Canada. South Korea’s won and the Philippine peso declined accompanied by the news that oil prices reached a nine-month high, stoking speculation inflation will accelerate and potentially limit the scope for monetary-policy easing.
Saktiandi Supaat, head of foreign-exchange research at Malayan Banking in Singapore said that imported inflation was a big concern in Asia, which is essentially being generated from the increase in oil prices.
The Canadian dollar also fell, moving towards parity with the US dollar. The loonie is now within half a cent of parity with the greenback, which fluctuated against the euro on European concerns. This was despite crude oil, Canada's biggest export, rising to a nine-month high, which emphasises the effect that the European crisis is having on the markets.For more information on foreign exchange treasury services and risk management, visit our Corporate FX sitePublished by Zeb Bham
Greece talks finally came to a conclusion yesterday as a 130 billion-euro bailout was agreed. However, there was relatively little cheer over the outcome, as the euro zone's two-year debt crisis has seen too many false dawns. The program was met with great uncertainty, with many experts asking not whether it will fall through but when it will fall through.
There was also concern over other countries in Europe, with many believing that Greece may not be the last country to fall foul of the debt crisis.
Sony Kapoor, managing director of Re-Define, told the Wall Street Journal: "While Greece is in a worse shape than any other euro-area country, the austerity-driven deep recession, collapse of business and consumer confidence, testing of the social fabric and dysfunctional politics seen there could all rear their ugly heads elsewhere."
The currency markets took a hit on the back of this confidence loss, with currencies dropping in Asia, Europe and Canada. South Korea’s won and the Philippine peso declined accompanied by the news that oil prices reached a nine-month high, stoking speculation inflation will accelerate and potentially limit the scope for monetary-policy easing.
Saktiandi Supaat, head of foreign-exchange research at Malayan Banking in Singapore said that imported inflation was a big concern in Asia, which is essentially being generated from the increase in oil prices.
The Canadian dollar also fell, moving towards parity with the US dollar. The loonie is now within half a cent of parity with the greenback, which fluctuated against the euro on European concerns. This was despite crude oil, Canada's biggest export, rising to a nine-month high, which emphasises the effect that the European crisis is having on the markets.For more information on foreign exchange treasury services and risk management, visit our Corporate FX sitePublished by Zeb Bham
