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Euro Exchange Rate Continues on the Back Foot
Published: 22 Mar at 10 AM Tags: Pound Sterling, Euro Exchange Rate, Swiss Franc Exchange Rate, Euro Crisis, UK, France,
The euro continues its decline as Cyprus continues to dominate the market’s attention.
The European Central Bank has given the Cypriot government a deadline of Monday to reach an agreement with its international creditors or warned that it will cut off the emergency liquidity funding for Cypriot banks after its proposal for a one-off levy on all bank deposits held within the Cypriot banking system was thrown out by the Cypriot government earlier on in the week.
The troika, representatives from the European Commission, International Monetary Fund and European Central Bank require Cyprus to come up with €5.75 billion in new funds via a levy on all deposits in order to qualify for a €10 billion bailout package. The Cypriot authourities are now looking into the possibility of organizing a possible bank restructuring that would involve the country's second largest bank, Cyprus Popular while still protecting all savings below a €100,000 threshold. The proposal is expected to reduce the recapitalisation needs of the Cypriot banks by €2.5 billion.
The Eurogroup (Eurozone Finance Ministers) stated yesterday that it “stands ready to discuss with the Cypriot authorities a new draft proposal”, but warned it would wait for the Troika's approval in order to move ahead on any deal. These officials also highlighted the need to fully guarantee deposits below €100,000.
The Cypriot Parliament is expected to vote on a new draft on Friday.
It is being reported this morning that Cypriot Finance Minister Michael Sarris will return home from his trip to Russia without having reached an alternative agreement on a bailout.
The euro was also hit yesterday by worse than expected data from its two leading economies, Germany and France. The German data saw manufacturing dropping from 50.3 to 48.9 and the services sector figure showed a fall from 54.7 to 51.6. Meanwhile, the France Markit PMI figures disappointed with manufacturing PMI coming in at 43.9 versus the 44.3 consensus figure and the services PMI came in at 41.9 versus the 44.0 consensus figure. Any figure at or below 50 indicates a contraction in activity.
The pound enjoyed a better day as it found all too rare support from better than expected UK economic data with CBI industrial orders coming in better than expected.
Meanwhile, UK Public Sector Borrowing unexpectedly came in much better than expected showing a big fall in government borrowing in February. Lastly, UK retail sales surprised on the upside with a 2.1% gain against the expected gain of 0.5% mooted by analysts.
The European Central Bank has given the Cypriot government a deadline of Monday to reach an agreement with its international creditors or warned that it will cut off the emergency liquidity funding for Cypriot banks after its proposal for a one-off levy on all bank deposits held within the Cypriot banking system was thrown out by the Cypriot government earlier on in the week.
The troika, representatives from the European Commission, International Monetary Fund and European Central Bank require Cyprus to come up with €5.75 billion in new funds via a levy on all deposits in order to qualify for a €10 billion bailout package. The Cypriot authourities are now looking into the possibility of organizing a possible bank restructuring that would involve the country's second largest bank, Cyprus Popular while still protecting all savings below a €100,000 threshold. The proposal is expected to reduce the recapitalisation needs of the Cypriot banks by €2.5 billion.
The Eurogroup (Eurozone Finance Ministers) stated yesterday that it “stands ready to discuss with the Cypriot authorities a new draft proposal”, but warned it would wait for the Troika's approval in order to move ahead on any deal. These officials also highlighted the need to fully guarantee deposits below €100,000.
The Cypriot Parliament is expected to vote on a new draft on Friday.
It is being reported this morning that Cypriot Finance Minister Michael Sarris will return home from his trip to Russia without having reached an alternative agreement on a bailout.
The euro was also hit yesterday by worse than expected data from its two leading economies, Germany and France. The German data saw manufacturing dropping from 50.3 to 48.9 and the services sector figure showed a fall from 54.7 to 51.6. Meanwhile, the France Markit PMI figures disappointed with manufacturing PMI coming in at 43.9 versus the 44.3 consensus figure and the services PMI came in at 41.9 versus the 44.0 consensus figure. Any figure at or below 50 indicates a contraction in activity.
The pound enjoyed a better day as it found all too rare support from better than expected UK economic data with CBI industrial orders coming in better than expected.
Meanwhile, UK Public Sector Borrowing unexpectedly came in much better than expected showing a big fall in government borrowing in February. Lastly, UK retail sales surprised on the upside with a 2.1% gain against the expected gain of 0.5% mooted by analysts.
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Source: moneytransfer.co.uk