Tuesday 25 October 2016

Euro see-saws on markets as Greece calls for creditors' deal

Published 26/05/2015 | 02:30

Greek Prime Minister Alexis Tsipras
Greek Prime Minister Alexis Tsipras

The euro fell against the major currencies yesterday as Greece called on its creditors to compromise and help break the talks deadlock.

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Over the weekend the country again reiterated that it would struggle to meet its upcoming payments to the International Monetary Fund (IMF), the first of which is due within weeks, unless a deal is reached to unlock bailout cash.

The euro fell to just under $1.10 yesterday morning while the continent's major stocks lost ground.

Conall Mac Coille, economist with Dublin-based Davy Stockbrokers, said the euro was largely stabilising against the $1.10 mark, suggesting investors weren't overly worried about Greece.

"Nikos Voutis, the Greek interior minister, said that once the government has paid pensions and salaries at the end of May it will be unable to meet the IMF payments in early June," Mr Mac Coille said.

"However, it remains to be seen whether these statements are mere sabre-rattling heading into final negotiations."

The Greek government yesterday moved to assuage any concerns that the country wouldn't make the payment, with a spokesman saying that Athens would do what it could, but a deal was urgently needed.

He also signalled that a deal could be found in the early part of next month.

"Based on the liquidity problems that we have, there is an imperative need for us and the Eurozone to have a deal as soon as possible," the spokesman said.

It has been speculated that Greece could face default within weeks, with the IMF due a payment on June 5.

Beyond that date, several more payments loom with the combined total coming in at around €1.6bn.

Negotiations between Greece and its creditors have now dragged on for months.

A deal to extend the country's bailout by four months was secured in late February, on the condition Athens would make economic reforms, but the talks have encountered problems in a number of areas, most notably involving pension and labour issues.

Greek Prime Minister Alexis Tsipras, pictured, said over the weekend the country can't accept crushing austerity, in a bid to placate hard-left elements within his own party.

The country's Finance Minister Yanis Varoufakis has said that the country has done all that it can, and now its creditors need to compromise.

German Chancellor Angela Merkel and French President Francois Hollande last week gave Mr Tsipras until the end of May to reach an agreement on its aid programme.

Dublin-based Goodbody Stockbrokers also suggested that investors believed a deal could be found.

Goodbody economist Dermot O'Leary said markets will soon focus their attentions to elections happening elsewhere in Europe.

"While Greece will continue to dominate headlines in the short-term, markets are undoubtedly going to shift their attention to important general elections in Portugal, Spain and Ireland over the next ten months or so," said Mr O'Leary.

"While there are clear signs of economic recovery, politics remains one of the most important risks to the Eurozone."

Irish Independent

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