Good morning and welcome to today\u2019s foreign exchange market commentary on Tuesday the 24th of January.<\/p>\n
The Greek debt deal, that has nearly the entire world\u2019s attention, proved elusive yet again as the ongoing PSI (private sector initiative) negotiations failed to reach a conclusion yesterday. Though there is a general consensus that time is running out, the holders of Greek debt rejected Athens\u2019 offer of lower interest rates on replacement bonds under a massive combination of write-downs and refinance mechanisms to bring the country back.<\/p>\n
However, Olli Rehn, the economic affairs commissioner of European Union said Greece must accelerate structural reforms of labour and other markets, and increase the tax base to secure a second loan programme. Greece is waiting for a new rescue deal worth \u20ac130 billion from its European partners, but must clinch a deal under the PSI that will cut Athens\u2019 debt by \u20ac100 billion. A spate of tax rises has already triggered massive public demonstrations across the country. Dutch Finance Minister Jan Kees de Jager however, was more forthright and said unless Greece convinces the EU of future growth and sustainable debt levels, there will be no further loans. Not sure if this is posturing or he means business, but if no deal materializes \u2013 which seems unlikely, it certainly opens the door for Greece\u2019s exit from the EU.<\/p>\n
The current negotiations are stuck over the interest rate on replacement bonds after banks write down 50 pc of existing Greek debt holding. The banks want a minimum of 4.0 pc while Luxembourg\u2019s Prime Minister wants the interest rates to settle between 3.5 pc and 4 pc for the period till 2020, helping Athens bring down the Debt-GDP ratio to 120 pc from 160 pc now.<\/p>\n
CURRENCY RATES OVERVIEW\u00a0<\/strong><\/strong><\/p>\n GBP\/EURO<\/strong> \u2013\u00a01.1979
\nGBP\/US$<\/strong> \u2013 1.5579
\nGBP\/CAN$<\/strong> – 1.5719
\nGBP\/AUS$<\/strong> \u2013 1.4860
\nGBP\/ZAR<\/strong> \u2013 12.46
\nGBP\/JPY<\/strong> \u2013\u00a0120.13
\nGBP\/NZD<\/strong> \u2013 1.9258
\nGBP\/NZD<\/strong> \u2013 1.9225<\/p>\n