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Sovereign debt issues return

Sovereign debt issues return

After a week of poor economic data leading to worries about the health of the global economy, Friday provided some respite with US nonfarm payrolls smashing expectations. However, the respite was short-lived as the Euro weakened against the major currencies due to the return of the sovereign debt crisis. The Euro weakened significantly against Sterling moving from 1.1059 on Thursday to 1.1431 at the end of the week and to 3 week lows against the USD.

On Friday rumours started that Greece would be leaving the single currency, due to its continued difficulties in meeting the terms of the bail out. Then over the weekend the Greek finance minister admitted that Greece would be seeking European help to finance it debt in 2012 and 2013. There were also worries in Portugal as opinion polls show that the upcoming election may not lead to the clear majority which is needed to implement the terms of the £69bn bailout package.

At the present time the rumours seem limited to Greece, Ireland and Portugal, but, as stated in previous notes the time to worry will be if Spain, the fourth biggest economy in the euro zone needs to turn to the European Financial Stability Facility fund for help in servicing its debt.

If, we take a quick look at the sovereign debt crisis it is easy to see why it continues to hang around like a bad smell. Both Greece and Ireland are likely to ask for the terms of their bail out to be renegotiated. Greece is struggling to implement the tax reform and changes needed in order for it to service its debts. Portugal’s finance minister expects to see two years of negative growth at a time when growth is required to service its debts. Finally, Spain has the largest unemployment in Europe at 21%. As well as all of these issues is the fact that interest rates have caused the currency to appreciate to recent highs means the possibility of driving growth through exports appears unlikely.

What does this all mean for me? Well buying your EUR, USD, AUD or any other currency at the wrong time could cost you a fortune. There is no crystal ball but Currency UK can give you the information you need to make an informed decision.

 

Currency UK will then offer you the best exchange rates available and ensure that you subsequent international transfers are handled as quickly and as efficiently as possible.

 

Contact us us now on +44 (0)20 7738 0777 or click here 

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