Saturday 10 December 2016

Danes shun euro as all eyes on Greece

Independent.ie reporters

Published 21/06/2011 | 11:26

Danish opposition to joining the euro rose to a record high as the debt crisis in Ireland and other European countries as more voters favoured the krone, according to new poll published by Danske Bank.

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And international investors remained edgy before a key confidence vote for Greek Prime Minister George Papandreou later in the day.

The vote is key for proving political backing for austerity measures demanded by international lenders and a failure by Mr Papandreou would raise doubts over a €12bn lifeline which would save Greece from near-term default

However, even If the prime minister survives, traders say relief would be short-lived as the debate over how to involve the private sector in a second bailout package will continue.

Ratings agency Fitch ratings warned again today that it would regard a voluntary rollover of Greece's bond maturities as default.

And Irish 10-year bond yields remain above 11.4pc compared with 2.95pc in Germany with the cost of insuring debt against default also reaching all-time highs in Greece and Portugal.

This would suggest that Ireland will have to continue to borrow from the ESM rather than enter the open markets over the medium term despite recent changes to rules regarding preferred status for European loans.

In Denmark, the lead of the ‘no’ bloc widened to 16.5pc to reach 56.7pc, according to the poll released today by Denmark’s biggest bank and conducted by Copenhagen-based Statistics Denmark.

The poll puts opposition to the euro at the highest since the currency was introduced in 1999.

Danes, who rejected the euro in a 2000 referendum, have grown more skeptical of euro adoption as Greece’s debt plight puts Europe’s single currency through its toughest test since its inception 12 years ago

“As well as the debt crisis in southern Europe and Ireland, the ‘no’ camp surge is probably also due to the Danish central bank having narrowed the official interest rate spread to the eurozone,” Steen Bocian, chief economist at Danske Bank, said in the statement.

“Hence, the costs of not being part of the eurozone appear significantly less than just a little more than two years ago.”

Greek Prime Minister George Papandreou faces a confidence vote later today as lawmakers decide whether to accept the austerity package.

Greek 10-year yields jumped 40 basis points yesterday to 17.34 percent as speculation the country may face bankruptcy continues. The yield on Denmark’s 10-year bond eased 2 basis points yesterday to 3.12 percent, compared with a 1 basis point decline on Germany’s 10-year bund to 2.95 percent. The difference between yields on Danish and German government debt is smaller than that of any euro member.

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