Euro Continues To Falter On Debt Concerns

Posted April 21, 2010

Euro debt concerns cause euro to fall. US dollar does well as does the Russian ruble.


Euro Turmoil

The European Union leaders and International Monetary Fund met on Wednesday to help work on providing resources and putting in place a plan for the financially struggling Greece. Even as they did so, the euro was hurting in trading on the currency markets.

In currency trading on Wednesday, the euro fell to nearly two week lows. This came as the yield on ten year Greek government bonds reached a new record when compared to German bonds. The German bonds are considered the euro zone standard option. The move with the euro today was in part due to trader’s even more so elevated concerns about Greek debt. Investors are simply unwilling to invest in the euro for the risk factor. Specifically, the investors were concerned about the long term financing of such a Greek debt bailout. They were more concerned with that financing over the risk of any new developments coming out of the woodwork in the euro zone.

Most economists believe that if the bailout plan for Greece does go through and this is the end of the worries for the euro zone that the euro will bounce back nicely and quickly. The biggest problem with this is the fact that investors do not yet believe that a plan is feasible.

Also notable is that investors are concerned about other countries and the potential debt problems there. One such country is Portugal where many envision similar problems to that of the Greece debt. The debt plan that the European Union leaders and the International Monetary Fund are working towards does not provide any help or information to aid other countries that may also struggle.

By The Numbers

In trading on Wednesday, the euro moved from US $1.3443 as of late Tuesday trading to US $1.3399 in trading on Wednesday. In addition, the US dollar moved from 93.15 yen to 93.20 yen by the end of trading. The euro moved from 125.23 yen late on Tuesday to 124.87 yen today. The UK pound moved from US 41.5371 to US 1.5409. The Swiss franc moved from 1.0683 to 1.0701 Swiss francs against the US dollar.

Canadian Dollar

The Canadian dollar fell against the US dollar in trading on Wednesday as well. This was due to the falling oil prices. However, it still remains near parity with the US dollar. On Tuesday, the Bank of Canada hinted that it may begin an interest rate hike starting as soon as June, however there is no information that verifies this as of yet. The US dollar moved from C $1.0013 to C$1.008 during trading.

Russian Ruble

Also important in the day’s trading was the Russian ruble. It moved to 16 month highest against a number of currencies including dollars and the euro. This was due to the oil price changes in the market place and the yearlong monetary easing cycle that the country is ending soon. The ruble moved up 0.2 percent to 33.56 in trading on Tuesday.