Good morning and welcome to today\u2019s foreign exchange daily market commentary on the 9th of November.<\/p>\n
Italian PM Silvio Berlusconi is all set to bow out after the parliament passes a budget law that includes the reforms demanded by EU members to fend off a Greece style sovereign debt crisis. Rome\u2019s debt burden at \u20ac1.9 trillion is much bigger and overshadows Athens\u2019 problems completely. However, Berlusconi\u2019s exit will take place until 2012 and is expected restore some confidence in the EU region. The yields on 10 year Italian debts continued to rise yesterday touching a fresh high of 6.74%. There is a distinct possibility of the ECB intervening to buy Italian bonds if yields touch the 7% mark.<\/p>\n
Meanwhile Russia has expressed confidence that Italy will be able to get its act together, bust raised apprehensions about Europe\u2019s ability to contain a contagion. \u201cThe situation is difficult in Greece and Italy. But, as I understand it, Berlusconi will go only after the budget and financial stability measures are passed,\u201d said Kremlin aide Arkady Dvorkovich to reporters.<\/p>\n
Russian foreign exchange reserve is estimated at $500 billion, roughly 40 per cent of which are euro zone sovereign debt. Terming the Italian plan \u201csufficient\u201d, Dvorkovich said Russia doesn\u2019t understand how the EU will implement the proposed \u20ac1 trillion EFSF expansion.<\/p>\n
\u201cWe do not fully understand how the EFSF will be topped up and will function … We do not understand where the additional 750 billion Euros will come from. If Europe takes clear decisions (on expanding EFSF), then we would consider participating, but that does not mean we would agree,\u201d he said.<\/p>\n
The ECB can play a more proactive role and there\u2019s no harm if it chooses to print more money to buy government assets, Dvorkovich noted.<\/p>\n
GBP\/EURO \u2013 1.1648
\nGBP\/US$ \u2013 1.6089
\nGBP\/CHF \u2013 1.4403
\nGBP\/CAN$ – 1.6265
\nGBP\/AUS$ \u2013 1.5549
\nGBP\/ZAR \u2013 12.6567
\nGBP\/JPY \u2013 124.74
\nGBP\/HKD \u2013 12.4922
\nGBP\/NZD \u2013 2.0194
\nGBP\/SEK \u2013 10.5431<\/p>\n