Exchange Rates and Market Commentary [18/10/2011]

Exchange Rates and Market Commentary [18/10/2011]

Good morning. Yesterday’s optimism indeed proved short-lived. German Finance Minister Wolfgang Schaeuble pricked the balloon that had just taken off over the scheduled October 23 meeting. He said the meeting may fail to provide a “definitive solution” to the region’s debt crisis. Rather a five-point plan will be adopted to address the region’s credit problems that is expected to include a bank recapitalization plan and asking private creditors to accept greater write-downs than the previously agreed 21 percent

losses on their holdings. Greece’s overall debt is forecast to mount to €357 billion or 162 per cent

of its GDP, a level that economists agree is unsustainable.
EU leaders are racing to convince banks to accept a 50-percent “voluntary” write-down on their Greek holdings, while trying to finalise a roadmap for recapitalising banks that may collapse due to the shock. If the banks refuse to accept the losses “voluntarily”, then a Greece default may result in bigger write-downs and trigger wider market chaos.

One possible solution being discussed, despite resistance from Germany and other northern European members, is to leverage the €440 billion EFSF emergency rescue fund.

CURRENCY RATES OVERVIEW

GBP/EURO – 1.1470
GBP/US$ – 1.5768
GBP/CHF – 1.4178
GBP/CAN$ – 1.6132
GBP/AUS$ – 1.5532
GBP/ZAR – 12.6345
GBP/JPY – 121.31
GBP/HKD – 12.2671
GBP/NZD – 1.9945
GBP/SEK – 10.5422

If your currency pairing is not listed above or you want to make an international money transfer, check out our comparison tables at www.mycurrencytransfer.com

If your currency pairing is not listed above or you want to make an international money transfer, check out our comparison tables at www.mycurrencytransfer.com

EURO: Moody’s warning over France’s sovereign rating and weaker US Empire State Manufacturing Survey data pushed the Euro down and the EUR/USD touched the 1.3800 level. German ZEW data is due for today along with UK inflation data. The GBP/EUR is trading at 1.1508 and may see some movement today.

USD: The GBP/USD pair fell yesterday after touching a high of 1.5850 during early London trade. Top German economist’s forecast warning France’s AAA rating may come under cloud didn’t help the cable either. In the Eurozone, the euro slid by 0.6 per cent against the Sterling after Germany said no big breakthroughs should be expected on Sunday’s meeting.

Elsewhere, the Sterling gained against the Canadian dollar yesterday. Both the AUD and the NZD lost ground against the greenback on weak risk sentiment.

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