The Euro to US Dollar (EUR/USD) exchange rate was trading steadily in the region of 1.131 on Wednesday afternoon.
Economists, traders and investors are jittery as they await the outcome of an emergency meeting of European Union Finance Ministers. The meeting is not expected to yield any results however as both the EU and New Greek government are unlikely to reach a deal.
Greece’s current batch of bailout funds is set to expire on February 28 and the Greek government has ruled out renewing or extending it. Instead, it wants a bridging loan that would fund the nation until September.
Germany and other EU members however have ruled out such a loan and fears are growing that the clash between sides could lead to Greece exiting the Eurozone. The Eurogroup has given itself until next Monday to reach some sort of agreement.
‘I think it would be good for the European Union and Greece for it to remain a member of the Euro. I am convinced that it would be a total disaster for Greece if it were to leave the Euro. I hope that it continues to correct its position so that it can reach an agreement in the Eurogroup meeting, in its dialogue with the European Council,’ said Portugal’s President Anibal Cavaco Silva.
The Syriza led Greek government says that the conditions of the €240 billion bailout has been a disaster for the country’s people and has rejected the Troika of creditors comprised of the EU, International Monetary Fund (IMF) and European Central Bank (ECB) overseeing that the terms of the bailout are enforced.
Stalemate Expected to Drag On
A number of economists are expecting that no deal will be reached today and that the standoff will continue.
‘We will not get a clean close to this crisis today. I think this will drag on. The Greeks have digested a record amount of austerity, so they’ll want some relief from that,’ said Michael O’Sullivan, chief investment officer at Credit Suisse Private Banking in an interview with Bloomberg.
The Euro came under more pressure as a poll published by Reuters showed that there is now a one-in-four chance that Greece will leave the Eurozone. The poll also suggests that the single currency region will remain in deflation territory for most of 2015, despite the launch of the European Central Bank’s €1.1 trillion quantitative easing programme.
If the meeting ends with no deal being reached then we can expect the US Dollar to advance.
Euro Exchange Rates:
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