Tradervox (Dublin) - The Greek crisis has moved closer to being solved after the finance ministers agreed to approve the 130 billion-euro bailout plan. The 17-nation currency advanced against major currency but later pared against some after the news that the crisis will persist. The euro climbed to a three-month high against the yen while it registered a six month high against the dollar. However, it later pared against the dollar settling at above $1.3200.
The currency still remains little unchanged against the USD. Greek private investors agreed to a 53.5 percent cut which is greater than the previous arrangement. Luxembourg Prime Minister Jean-Claude Junker seemed contented with this arrangement after the 13 and half hour meeting yesterday.
According to Chris Walker, a Currency Strategist at UBS AG in London, the agreement has given support for the euro for the near future as the outright default in March seems to have been avoided. However, he was quick to add that cautiousness still looms as there is some unresolved issues.
The euro had risen to 106.01 yen before dropping to 0.2 percent increment to settle at 105.64 percent. The 17-nation currency traded at 1.3238 against the dollar. The dollar had increased by 0.2 percent against the yen to trade at 79.81 per yen. The Greece deal seems to have averted the demand for safe haven assets which has resulted to the decline of the dollar against the euro.
According to European Central Bank President Mario Draghi, the Greece debt crisis deal was a very good agreement while the Italian Prime Minister applauded the private investors for agreeing to a bigger write-off. The growing optimism of an agreement had increased the euro by 0.5 percent over the last week. Over the same period the dollar fell by 0.4 percent while the yen was down by 2.3 percent.
However, according to a Senior Foreign Exchange Strategist at Royal Bank of Scotland Group Plc, the gains made by the euro may be limited since Greece face a tremendous task of the austerity and economic recovery. To compound the problem further for Greece, the economy is under recession for the fifth year running and there are fears of social unrest if this continues.
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