Good morning and welcome to today\u2019s foreign exchange market commentary on Friday, the 16th of November. <\/p>\n
Those worried over a possible \u2018Grexit\u2019 may take heart as EU leaders have reiterated their pledge to keep the Hellenic nation in the currency union. German Chancellor Angela Merkel has made it clear for some months she wouldn\u2019t eject Greece out if she could possibly help. However, it is also clear that Germany and other Northern countries are unwilling to commit billions to keep Athens alive in its death bed. So the recent dilemma over releasing the next tranche of EUR 31.5 billion in aid money is understandable.<\/p>\n
Greece was praised however, for making progress on its budget and initiating structural reforms November 12th meeting in Brussels. Eurozone also granted it two more years to meet its fiscal target, extending the 2014 deadline to 2016 for achieving a primary budgetary surplus of 4.5 percent of GDP.<\/p>\n
The EZ finance ministers however could not agree on bringing down the mammoth debt burden and financing this extension. If a consensus is not reached on the next Nov 20 meeting by the finance ministers, the issue would be taken up in a European Summit meeting two day\u2019s later. <\/p>\n
Meanwhile, Athens had to refinance EUR 5 billion of T-bills falling due today and the ECB wouldn\u2019t accept more than EUR 3.5 billion in T-bill collaterals under the current ceiling. This reduces incentives for Greek banks to buy the securities. But Olli Rehn, the EU commissioner for monetary and economic affairs, said Greek banks have more money than previously thought and rolling over the debt should not be a problem.<\/p>\n
The damage to the country\u2019s economy has been made public through a leaked assessment of the economy by the troika of the EC, the ECB and the IMF. Much of the damage has been caused by the uncertainty over Greece\u2019s continuance in the currency union. Nonetheless, the authors of the report were apparently surprised by the depth of the crisis. <\/p>\n
Greece\u2019s Prime Minister Antonis Samaras announced the latest round of cuts, amounting to EUR 13.5 billion for 2013-14, will be the last. But the troika report says another round of cuts worth EUR 4 billion would be required in 2015-16. Additionally, extending the fiscal targets means Greece will need to borrow about EUR 33 billion. That translates to another bailout.<\/p>\n
Even if an agreement is reached over the additional money, it\u2019s not clear how sustainable will be country\u2019s debt levels. An earlier private sector \u201chaircut\u201d was expected to bring down the country\u2019s debt level to 120 percent of GDP by 2020. That surely will be missed by a wide margin. Sources from the IMF suggests the country\u2019s debt-GDP ratio will be at 160 percent by 2020 while a European commission estimate puts it at a manageable 140 percent. <\/p>\n
Either way, Greece\u2019s debts need to be rescheduled, either by lowering interest rates or by extending maturities. The IMF however, advocates a more radical step: forgiveness of Greek debt. That could prove a political minefield for Merkel\u2019s Germany and other creditor countries as it amounts to acknowledging that the money lent to Athens has been lost forever. <\/p>\n
GBP\/EURO \u2013 1.2442
\nGBP\/US$ \u2013 1.5874
\nGBP\/CHF \u2013 1.4987
\nGBP\/CAN$ – 1.5882
\nGBP\/AUS$ \u2013 1.5362
\nGBP\/ZAR \u2013 13.0862
\nGBP\/JPY \u2013 128.81
\nGBP\/HKD \u2013 12.3122
\nGBP\/NZD \u2013 1.9568
\nGBP\/SEK \u2013 10.7391 <\/p>\n
EUR<\/strong>: The euro edged up against the US dollar on Thursday despite the currency-union\u2019s GDP shrinking by 0.1 percent in the third quarter. EZ is officially in a double-dip recession now. Individually, German and French GDP numbers came in slightly higher while Italian GDP reading fell short of expectations. The EUR\/USD pair came close to breaking the 1.2800 level but failed and opens lower at 1.2760 this morning. European inflation came in at 2.5 percent y\/y, in line with expectations. Sterling has gained against the EU unit overnight and the GBP\/EUR pair opens at 1.2453.<\/p>\n USD<\/strong>: The Cable has remained fairly range-bound against the US unit despite UK October retail sales data printing below forecasts at -0.8 percent. The looming US fiscal cliff and strife in the Middle East is keeping the greenback fairly well supported. A raft of weak data didn\u2019t help the USD\u2019s cause either as weekly unemployment rate rose sharply due to Hurricane Sandy while the Federal Reserve of Philadelphia Manufacturing Index slipped in October, indicating contraction in manufacturing activity. Inflation however, met expectations with CPI for the quarter printing at 0.2 percent m\/m. The GBP\/USD pair opens at 1.5880 this morning. <\/p>\n Have a great weekend!<\/p>\n","protected":false},"excerpt":{"rendered":" Good morning and welcome to today\u2019s foreign exchange market commentary on Friday, the 16th of November. Those worried over a possible \u2018Grexit\u2019 may take heart as EU leaders have reiterated their pledge to keep the Hellenic nation in the currency union. German Chancellor Angela Merkel has made it clear for some months she wouldn\u2019t eject Greece out if she could […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[110],"tags":[],"_links":{"self":[{"href":"https:\/\/www.mycurrencytransfer.com\/blog\/wp-json\/wp\/v2\/posts\/2387"}],"collection":[{"href":"https:\/\/www.mycurrencytransfer.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.mycurrencytransfer.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.mycurrencytransfer.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.mycurrencytransfer.com\/blog\/wp-json\/wp\/v2\/comments?post=2387"}],"version-history":[{"count":2,"href":"https:\/\/www.mycurrencytransfer.com\/blog\/wp-json\/wp\/v2\/posts\/2387\/revisions"}],"predecessor-version":[{"id":2389,"href":"https:\/\/www.mycurrencytransfer.com\/blog\/wp-json\/wp\/v2\/posts\/2387\/revisions\/2389"}],"wp:attachment":[{"href":"https:\/\/www.mycurrencytransfer.com\/blog\/wp-json\/wp\/v2\/media?parent=2387"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.mycurrencytransfer.com\/blog\/wp-json\/wp\/v2\/categories?post=2387"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.mycurrencytransfer.com\/blog\/wp-json\/wp\/v2\/tags?post=2387"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}