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Greek to put further pressure on euro

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Greek uncertainty to put further pressure on euro

The euro is expected to come under further pressure as a result of continuing uncertainty over the fiscal situation in Greece.

According to foreign exchange specialist HiFX, the euro weakened prior to yesterday's vote in the Greek parliament over a new austerity package.

This, it said, was made worse by a "bullish" mood regarding the US dollar and a further downgrading of the eurozone's economic outlook by the European Commission.

"As a result, investors took a general risk off tone against the euro and some were seen speculating on a rate cut by the ECB," said Tim Kirkham, a director at HiFX.

He noted that there is considerable public disquiet in Greece regarding its financial status at the moment.

As a result, he believes the euro is likely to continue struggling on the financial markets in the next few days.

Mr Kirkham went on to point out that the new austerity package was only "narrowly approved" by the Greek parliament in this week's vote.

However, he said the country's government had to make use of emergency regulations to speed up the passage of the measures, as well as "back down on cutting parliamentary employees' wages in line with other public sector workers".

Mr Kirkham noted that this was very important vote, as it will help to ensure the country receives financial support of more than €31 billion, as well as drive down the interest rate applied to the bailout money.

"This is all subject to another vote on Sunday where parliament must back Greece's 2013 budget," he added.

George Tzogopoulos, from think-tank ELIAMEP, has called for Europe to offer practical support to the country to give its economy the chance of expanding in the future.
Speaking to the Independent, he warned that if it fails to do, it will threaten Greek society and the unity of the nation's coalition government.

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