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EURO - FAIR WEATHER CURRENCY ?
20 Jan 2010, 1706 hrs, REUTERS
The dollar rose half a percent against a basket of major currencies while the euro fell as low as $1.4168 .
Benchmark 10-year bond yield spreads between safer Germany and Greece widened to 279 basis points from 265 basis points.
Greece's ballooning debt level, estimated at more than 120 percent of gross domestic product, has prompted speculation that the country may be unable to service its obligations.
The European Union and rating agencies piled pressure on Greece on Tuesday to quickly implement budget reduction plans resisted by trade unions.
Standard & Poor's and Moody's said it was key for Greece to start immediately cutting its budget deficit, which hit 12.7 percent of gross domestic product in 2009.
"The fiscal difficulties of Greece and other euro zone countries have confirmed the view that the euro was a fair weather currency, which only works well while the economy is doing well and is not interrupted by anything more than the mini recession in 2001," Commerzbank said in a note to clients.
"The recession made the design flaws of the euro very obvious to see."
.
20 Jan 2010, 1706 hrs, REUTERS
The dollar rose half a percent against a basket of major currencies while the euro fell as low as $1.4168 .
Benchmark 10-year bond yield spreads between safer Germany and Greece widened to 279 basis points from 265 basis points.
Greece's ballooning debt level, estimated at more than 120 percent of gross domestic product, has prompted speculation that the country may be unable to service its obligations.
The European Union and rating agencies piled pressure on Greece on Tuesday to quickly implement budget reduction plans resisted by trade unions.
Standard & Poor's and Moody's said it was key for Greece to start immediately cutting its budget deficit, which hit 12.7 percent of gross domestic product in 2009.
"The fiscal difficulties of Greece and other euro zone countries have confirmed the view that the euro was a fair weather currency, which only works well while the economy is doing well and is not interrupted by anything more than the mini recession in 2001," Commerzbank said in a note to clients.
"The recession made the design flaws of the euro very obvious to see."
.