Euro in reverse as Cyprus bailout enthusiasm fades

Currencies Direct March 26th 2013 - < 1 minute read

The euro plunged against the pound and the US dollar as initial
enthusiasm about the Cyprus bailout deal recessed into fears about
the future implications of the €10 billion rescue package.

Initially the single currency’s
exchange rate
had risen to 1.3000 against the dollar after the
country struck a deal to avoid financial collapse that will see its
second-largest bank close and inflict heavy losses on unsecured

But the euro quickly retraced its gains versus the pound and
dollar as Jeroen Dijsselbloem, the Dutch chief of the Eurogroup of
finance ministers, indicated that the Cypriot deal could form a
template for eurozone bank bailouts.

EUR/GBP moved to a six-week low below 0.85, as sterling extended
its two weeks of gains against the common currency. The GBP/EUR
exchange rate rose above 1.18.

Meanwhile, EUR/USD traded close to a four-month trough of
1.2829, touching on the November low of 1.2661.

The single currency has fallen more than six per cent from a
peak of 1.3711 reached on February 1st.

Sterling also fell against the dollar, after rating agency Fitch
put the UK on negative watch on Friday night. The pound lost 0.4
per cent to 1.5178.

Written by
Currencies Direct

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