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Euro flounders amid Greek woes

Text by Siva SITHRAPUTHRAN

Latest update : 2010-02-23

The euro fell to nine-month lows against the dollar amid widespread concerns about Greece's massive public debt and the tough measures required to reduce the debt burden.

 

The euro floundered close to nine-month lows against the dollar as concerns about the problems facing Greece undermined sentiment on the common currency shared by 16 nations in the European Union (EU).
 
The euro slipped to around $1.3600, its lowest point since May last year.
 
Greece is at the heart of the currency’s fresh bout of weakness. The country faces a gaping public deficit and is expected to undergo a period of severe belt tightening in the near future. While the EU stated last week that it would provide determined and co-ordinated action to support Greece if needed, the euro has continued to suffer heavy selling pressure as details about just how Greece will lower levels of expenditure remain sketchy.
 
More recent developments saw the rhetoric harden. Eurogroup chief Jean-Claude Junker said eurozone finance ministers had agreed Greece should propose new measures by March 16 to meet deficit targets and if Greece appears reluctant, additional measures will be needed.
 
"Greece is between a rock and a hard place, and that hurts the Euro," Neil Mellor,  currency strategist at Bank of New York Mellon Corp, told FRANCE 24.
 
Public debt in Greece stands at 12.7% of GDP, well above the 3% limit imposed by EU rules. The country has pledged to reduce debt to 8.7% this year by making major reductions in public spending. The measures are likely to prove unpopular.   

"Markets are closely watching how eurozone members will address Greece’s delicate fiscal position," said Andrea Appeddu, an analyst at rating agency Moody’s.

Besides Greece, worries about public debt in Portugal, Spain and Ireland are also weighing on the euro.

Date created : 2010-02-16

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