Good morning and welcome to today\u2019s foreign exchange market commentary on Wednesday the 14th of December.<\/p>\n
The euro took a beating again yesterday touching a fresh nine month low versus the US dollar. Skeptics are of the opinion that the measures announced in Friday\u2019s Brussels summit will fall short because it ignores the credit market dynamics completely.<\/p>\n
Europe\u2019s rule-based fiscal reforms, rather than fiscal union, may not be sufficient for the common currency zone. The commitment from the member states for further austerity measures, rather than fixing the faulty banking system that created destructive credit bubbles in the first place, may prove fatal.<\/p>\n
Reforming the fiscal framework without fixing the financial system \u2013 the ponzi-fest of lending that suck in Ireland and Greece, and now threatening France and may threaten Germany soon, fails to bring the current crisis to its logical conclusion. <\/p>\n
A similar storm was brewing in Spain with housing-related credit, but fortunately not resulted to a banking crisis.<\/p>\n
Greece had a unique problem \u2013 state fudging of economic data. It\u2019s worth noting here that no amount of new rules will stem the rot if governments start fabricating economic statistics. Most of the efforts in Europe have been devoted to make the banks solvent, rather than reforming them to prevent future credit bubbles. Unless states break the chain of bank-state dependency, banks may truly break states in the future. <\/p>\n
GBP\/EURO \u2013 1.1895
\nGBP\/US$ \u2013 1.5488
\nGBP\/CHF \u2013 1.4668
\nGBP\/CAN$ – 1.6038
\nGBP\/AUS$ \u2013 1.5485
\nGBP\/ZAR \u2013 12.9261
\nGBP\/JPY \u2013 120.74
\nGBP\/HKD \u2013 12.0471
\nGBP\/NZD \u2013 2.0490
\nGBP\/SEK \u2013 10.8182 <\/p>\n