stirring up resentment and emotions
London, UK (PRWEB) February 26, 2010
Recent market speculation against the euro has been criticized by German Chancellor Angela Markel. She accused currency speculators of "stirring up resentment and emotions", but are they really making the most of the severe fiscal debt in Greece and other eurozone countries?
In recent weeks, euro selling has reached record levels in the foreign exchange market. Serious concern over the health of the Greek economy and its effect on euro stability reached such a high level that investors made $9.9 billion worth of bets against the euro - the highest since the euro single currency was introduced. The euro has not seen such worrying negative sentiment since the collapse of the Lehmann Brothers at the end of 2008 - a time when investors rushed into the relative safe haven of the US dollar.
When eurozone finance ministers met last week to discuss a bailout package for Greece, no clear plans were announced. Were they really willing to come to the aid of the flailing Greek economy, or did they need to fix their own recovery first? Either way, the lack of certainty caused the market to continue its widespread avoidance of the euro - so much so that economists suggested that the situation had gone too far.
Now, Germany claims that a bailout package of up to €25 billion will be earmarked for Greece and Merkel herself said that a solution for the 'Greek crisis' is the "core element" in bringing confidence back to the euro. Big banks who have been partaking in anti-euro speculation are those which had been rescued by Merkel's Government just over a year ago. This fact is what angers Merkel the most, suggesting that it will be harder than ever to gain the trust of the German people.
Not only large banks have been speculating over the euro and other currencies. Private investors have become core to the constantly-expanding foreign exchange market and now most brokers offer online platforms for trading round the clock.
Companies such as FairFX, World First and FXPro offer multiple high tech platforms and surrounding support for private investors, alongside their corporate account services.
Since inception in 2000, the euro reached a peak in 2009 while the global financial crisis was at its peak. Against the US dollar, it gained nearly 60% thanks to the broadly weaker dollar and the inflation-battling measures taken by the European Central Bank. As the US Federal Reserve and the Bank of England struggled with their dramatically failing banking systems, the euro enjoyed renewed interest from private and corporate investors alike. It is almost hard to believe that the euro may have been on the verge of becoming the new world reserve currency.
Today the situation has changed hugely, but have things gone far enough? Merkel and many currency analysts might suggest that it has, yet there are hints that Greece's problems are just the tip of the iceberg. Portugal, Spain and Italy are all battling to control their vast deficits and are on the edge of heading into the same troubled waters as Greece. This is enough to mean that the euro's outlook remains cautious and investors across the board will continue to raise questions.
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