The euro advanced for the second straight day versus the U.S. dollar and the Japanese yen, supported by the announcement of the European Union officials that they are ready to aid Greece if necessary and also on outlook that Greece will get the international bailout to avoid the budget default, probably by the end of this week.
The spread between the yield of the Greek 10-year bonds and the German bonds rose yesterday to 442 basis points, the highest level since the appearance of the euro. Greece will require to look for emergency funding to repay its debt, which is more than 20 billion euros, during the next two months. On March 26th the European leaders declared that the support package, involving the International Monetary Fund, will be provided to Greece if needed, rescuing it from the default.
The French President Nicolas Sarkozy announced: “A support plan has been agreed and we are ready to activate at any moment to come to the aid of Greece.” George Papandreou, the Prime Minister of Greece, has voiced his opinion that the borrowing at the current levels is unsustainable. Analysts say that the recent happenings at the market have signaled that the external intervention may be unavoidable and the intervention is very likely to occur over this weekend.
EUR/USD climbed to 1.3471 as of 17:02 GMT after opening at 1.3360. EUR/JPY traded at about 125.55, going up from its opening price of 124.73.
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