Related News
Investors leery on euro move
By Erik Kirschbaum and Daniel Flynn |
November 30, 2010, Tuesday
|
Print Edition
Print Edition
GERMANY and France declared yesterday that Europe had taken decisive action to save the euro by rescuing Ireland and laying the foundations of a permanent debt resolution system, but investors were not convinced.
Under pressure to arrest the threat to the currency before markets opened and prevent contagion engulfing Portugal and Spain, EU finance ministers endorsed an 85-billion euro (US$115 billion) loan package on Sunday to help Dublin cover bad bank debts and bridge a huge budget deficit.
They also approved the outlines of a long-term European Stability Mechanism, based on a Franco-German proposal, that will create a permanent bailout facility and make the private sector gradually share the burden of any future default.
"This is a measure which is not simply a single shot taken in response to an important crisis, it forms part of the absolute determination of Europe - of France and Germany - to save the euro zone," French government spokesman Francois Baroin told Europe 1 radio.
German Finance Minister Wolfgang Schaeuble said now that clarity had been achieved, "we are hoping for calming and reality in the financial markets," where he said speculation against euro zone countries was "hardly rational."
Initial market reaction to the deal in Asia was cautiously negative. After a brief jump, the euro fell to a two-month low of US$1.3183 before recovering to trade close to Friday's levels.
Irish Prime Minister Brian Cowen, who for weeks denied Dublin needed a bailout, expressed satisfaction with the deal despite the interest rate of close to 6 percent which Ireland will have to pay on the loans.
But initial reactions from market analysts to the EU moves ranged from skeptical to bleak.
"I don't think this is going to be a silver bullet. I think there are still going to be some question marks on Portugal and Spain," said Peter Westaway, chief economist at brokers Nomura.
Under pressure to arrest the threat to the currency before markets opened and prevent contagion engulfing Portugal and Spain, EU finance ministers endorsed an 85-billion euro (US$115 billion) loan package on Sunday to help Dublin cover bad bank debts and bridge a huge budget deficit.
They also approved the outlines of a long-term European Stability Mechanism, based on a Franco-German proposal, that will create a permanent bailout facility and make the private sector gradually share the burden of any future default.
"This is a measure which is not simply a single shot taken in response to an important crisis, it forms part of the absolute determination of Europe - of France and Germany - to save the euro zone," French government spokesman Francois Baroin told Europe 1 radio.
German Finance Minister Wolfgang Schaeuble said now that clarity had been achieved, "we are hoping for calming and reality in the financial markets," where he said speculation against euro zone countries was "hardly rational."
Initial market reaction to the deal in Asia was cautiously negative. After a brief jump, the euro fell to a two-month low of US$1.3183 before recovering to trade close to Friday's levels.
Irish Prime Minister Brian Cowen, who for weeks denied Dublin needed a bailout, expressed satisfaction with the deal despite the interest rate of close to 6 percent which Ireland will have to pay on the loans.
But initial reactions from market analysts to the EU moves ranged from skeptical to bleak.
"I don't think this is going to be a silver bullet. I think there are still going to be some question marks on Portugal and Spain," said Peter Westaway, chief economist at brokers Nomura.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
