Markets calm amid default rumours
Currencies Direct September 27th 2011 - < 1 minute read
The Forex markets were calm in yesterdays trading day as traders and investors alike attempted to interpret the rumours surrounding a Eurozone bailout package that started over the weekend. Stories have been popping up about a EUR1.7 trillion fund which would be aimed at saving the Eurozone and allow Greece to default on its GBP340bn debt pile. This would involve propping up the banks that have invested in Greek bonds so that a controlled bailout can begin on the ailing country. Further plans involve recapitalising Europe with tens of billions of Euros to reassure the markets. UK Chancellor George Osbourne was forced to issue a hastily drafted statement after a British Treasury official outlined behind-the-scenes moves allowing a Greek default. His comments insisted that Greece does have a recovery plan and must carry it out as he rejected claims that the G20 would allow a default.
The markets reacted with the Euro taking a small hit across the board, but also the US Dollar as some investors hastily moved funds from the so-called “safe haven” other instruments. Little volatility has occurred since then as everyone waits for any more news/rumours surrounding the main story of the moment. The likelihood of Greece being able to follow its current plan and rebuild its economy seems unlikely and some sort of default or write down of their debt seems inevitable.