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Greek election creating more uncertainty

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Businesses around the world have been keeping a close eye on Greece amid its financial crisis, particularly given the turmoil across the rest of the eurozone.

With the volatility affecting the relative value of the euro against other currencies, those that operate internationally may have been tempted to curb international money transfer activity, or at least arrange a currency comparison in order to find the best exchange rates before moving funds.

But with the Greek prime minister Lucas Papademos announcing recently that the country will go to the polls next month, does the prospect of greater stability look nearer or further away?

According to foreign exchange specialist HiFX, news of an upcoming election is adding to the sense of uncertainty surrounding Greece.

However, senior consultant Sabrina Derrough believes the outcome of the vote will not make a significant difference to its financial position. Indeed, she noted that both the International Monetary Fund and the European Union have told the country that the winner of the election must stick to the current strategy or risk losing its bailout aid.

"Whoever wins will have minimal wiggle room, get the Greek house in order or leave the euro - a sense of deja vu prevails," Ms Derrough commented.

She stated that Europe has recently been able to enjoy a "brief period of calm", but said the election announcement has put the spotlight firmly back on the continent.

Ms Derrough added that concerns over the stability of Spain and Italy have also been raised in the last few days, as there are doubts over whether the eurozone will be able to support the two countries should they end up needing assistance.

"The worry is dragging down equity markets from recent highs, along with risk currencies like sterling and especially the commodity currencies, which have been the main casualty of recent risk aversion," she said.

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