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Euro 'still vulnerable to a shock'

Euro 'still vulnerable to a shock'

The single European currency remains in a highly precarious position, a foreign exchange specialist has said.

According to HiFX, the euro has "benefitted recently" from the weakness of the US dollar.

However, director of risk advisory services Tim Kirkham said it is still "vulnerable to a shock", which is why it is appreciating at a fairly subdued rate.

"Is it a question of which is weakest – the euro with problems in Greece, Italy, Spain, Portugal, Ireland or the US with a huge fiscal cliff just around the corner?" he commented.

Mr Kirkham was speaking while French president Francois Hollande and German chancellor Angela Merkel are meeting to discuss whether Greece should be granted additional time in which to meet the terms of its debt bailout.

Antonis Samaras, the prime minister of Greece, is asking for a two-year extension to the agreement to give the country a little bit more breathing room.

Mr Kirkham said the Greek government believes this would also give it an opportunity to demonstrate that its economic reforms are yielding positive results.

He warned that if European Union leaders are not satisfied Greece is on course to meet its financial targets, it could "withhold an initial payment of €31 billion as part of the bailout".

This, he said, could lead to the country going broke and being forced to pull out of the eurozone.

Mr Kirkham stated that no decision is to be taken until October at the earliest, which means the world and the financial markets must keep waiting to see what happens.

Chairman of Eurogroup Jean-Caude Juncker has already said he is against the notion of Greece exiting the single European currency.

He acknowledged the country is going to great lengths to tackle its debt problems, but said it has only one more chance to implement the changes that are needed.

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