Daily Forex Brief 26th September
Daily Forex Brief |
All the indications are that European leaders are moving towards what markets have viewed as inevitable for months, namely a write-down on Greek government debt. This is the chatter emerging from the IMF meeting in Washington. Reports suggest that even the Greek finance minister sees a 50% write-down as the best of the available options. There is also talk of a further enhancement of the European Financial Stability Fund (EFSF), boosting it from the proposed EUR 440bln to around EUR 2trln, either via loans from the ECB, guarantees or a combination thereof. On one level, these developments are positive. However, once again the measures are merely catching up with what has been market thinking for the past several months (Greek default, greater EFSF firepower) and what's not changed, are the crippled institutional and leadership arrangements of the eurozone. This has been one of the main barriers to resolving the eurozone crisis and may yet cripple these new initiatives. Perhaps wisely, the euro is not jumping for joy in early trading today. |
