Persistent Greek Concerns Pressure Euro
The euro fell for the second straight day vs. the US dollar and the yen on concerns that a political rift in the EU will hamper the multi nation group from offering financial assistance to debt ridden Greece. Greek Prime Minister George Papandreou has set a one week deadline for the EU to devise a financial aid package at the upcoming EU summit next week. Papandreou also said he will turn to the International Monetary Fund unless EU nations devise a lending plan at next week’s EU meeting. The IMF option is opposed by European Central Bank President Jean-Claude Trichet and French President Nicolas Sarkozy who say it would show the world that the EU is incapable of solving its own problems. Sebastien Galy of BNP Paribas SA stated, “It’s political brinksmanship now. People are expressing their views on Greece and its issues by getting short euro-dollar.” The euro fell 0.8% against the dollar to $1.3625 and against the yen fell 0.8% trading at 123.04 yen.
German Opposition to Greek Aid Widespread
German opposition to an EU loan program has been fierce and has caused a political rift between Greece and Germany. German Chancellor Angela Merkel’s government is attempting to avoid making any commitment to an EU bailout program for Greece. Merkel’s government believes that Greece should turn to the International Monetary Fund for aid. Yesterday Merkel told the German Parliament in Berlin that the IMF id possible the only answer to Greece’s massive debt problems. German lawmaker Michael Meister, a member of Merkel’s Christian Democratic Union said in Berlin, “We have to think about who has the instruments to push for Greece to restore its capital-markets access. Nobody apart from the IMF has these instruments.” Meister also said that trying to bailout Greece without the IMF “would be a very daring experiment.” German opposition may hamper any EU efforts to devise a contingency rescue plan for Greece. Merkel told Parliament yesterday, “The problem has to be solved from the Greek side and everything that is being considered has to be oriented in that direction.”
Many Expect Germany to Soften Opposition
The political differences are weakening investor confidence in the multi nation currency. Simon Derrick of BNY Mellon Corp. in London stated, “The euro is weakening as investors are questioning whether there really is a plan to support Greece. From an investor’s perspective, do you feel comfortable, in these circumstances, being heavily invested in peripheral Europe?” Some experts believe that at some point Germany will stop playing hardball and relent to an EU solution. Paul Hofheinz of the Lisbon Council stated, “The Germans see the same thing that all of us see: that at the end of the day, they’re going to be part of the solution and it’s going to cost them something.”
Quick Forex Tip: Forex trading offers investors a profitable investment option and can be one of the most rewarding opportunities available to the average investor. Major attractions are the 24 hour a day availability of forex markets, low dealing costs, high leverage margin and high liquidity. Currency trading forex can be learned quickly and easily. There are several free reputable courses available online and many online forex dealers provide demo accounts where novice traders can learn the market before risking any real money.
