Written by Josh Ferry Woodard on February 13th, 2012
Greece will receive a second aid tranche of $130 billion in return for its concessions, in order to pay off some of its immediate debt obligations.
Sterling / Euro and US Dollar exchange rates
Last night Greek rioters burnt down an underground cinema in Athens that was previously used by the Gestapo as a torture chamber during World War Two; a powerful symbolic message from the people of Athens to the EU/IMF: ‘We won’t accept your torturous conditions’. The anger and resentment of the Greek people erupted as the Hellenic government approved the controversial austerity package demanded by its creditors in return for a second bailout fund. The crippling programme includes raising the retirement age, cutting pensions and slashing the minimum wage by 22%. Greece will receive a second aid tranche of $130 billion in return for its concessions, in order to pay off some of its immediate debt obligations.
The idea behind the cuts is that they will allow the country to reduce its mammoth budget deficit, but many from within and outside the country state that the package will condemn the Greek economy to an ever-deepening downward spiral. The Pound to Euro Exchange rate has suffered slightly, with the Euro making gains since the bill was passed; the GBP/EUR pair is currently trading at 1.192 – as of 11:16 GMT. The Euro to US Dollar Exchange Rate has also seen the Euro fare well, rising above 1.32 towards 1.33. The EUR/USD pair is currently trading at 1.326 – as of 11:16 GMT.
Markets have posted a slightly muted response to the news; investors may be finding it difficult to see any real optimism from a country whose capital city is burning with tangible rage. 48 buildings were reported ablaze, 150 shops looted and 68 wounded in the aftermaths of last night’s riots. Greece still has four more matches to strike before the $130 billion aid package is released: Greece must convince the eurogroup of finance ministers on Wednesday night that it has now met the terms of the agreement; Greek political party leaders must pledge in writing that they will implement the austerity measures; the German Bundestag must approve the package on February 27th; and Private Sector Involvement must be consolidated with debt restructuring negotiations fully concluded.
When these terms are met expect a bit more support for the Euro, but full confidence will remain in check whilst political dissidence remains at large; Antonis Samaras, head of the New Democratic Party and widely tipped to be the next prime minister told parliament: “I ask you to vote in favour of the new loan agreement today and to have the ability to negotiate and change the current policy which has been forced on us.” His comments mirror the current civil unrest and pose a potential threat to the debt deal concluding smoothly.
The headlines and foreign exchange markets alike will once again be dominated by the Greek situation today. German Wholesale Price Index increased by 1.2% in January and Swiss Producer/Import Prices experienced stagnation in January – both to little effect – but that’s all on the ecostats front in Europe today.
- Pound Sterling to Euro Foreign Currency Exchange Rate Forecast – Sterling slips as 2nd Greek bailout agreed
- Pound, Euro US Dollar Currency Forecast – The Dollar also plummeted to the lowest level in 16 months against the Euro last night
- The pound has maintained its 15-month high against the Euro exchange rate
- The Pound rose to the highest level against the U.S Dollar
- The Pound is trading slightly down from yesterday at 1.208 against the Euro exchange rate