Euro falls as Greek voters reject austerity demands

Euro falls as Greek voters reject austerity demands

7 July 2015, 00:05
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Euro falls as Greek voters reject austerity demands


The euro fell against its main rivals Monday, but trimmed initial losses scored after Greek voters rejected conditions for a new bailout previously proposed by the country’s international creditors in a referendum that many viewed as a proxy on the country’s membership in the eurozone.

The 19-nation shared currency was down 0.8% EURUSD, +0.0181% against the dollar at $1.1026, from $1.1114 late Friday in New York. It was down EURGBP, +0.0282%  0.7% against the pound at 70.86 pence, and 0.8% EURJPY, +0.01%  against the yen, at 135.40.

The euro fell to its lowest level against the dollar in about a month after the referendum’s results were announced, but quickly trimmed its losses. The moves echoed action from last Monday’s session, which followed the Greek government’s surprise announcement of the referendum.

Many strategists had expected the common currency to plummet if Greeks voted “no” in Sunday’s referendum. But Elsa Lignos, senior currency strategist at RBC Capital Markets, attributed the relatively modest move to traders’ unwillingness to take large bets in the currency market, given the uncertainty of the situation.

Lignos added that the resignation of Greek Finance Minister Yanis Varoufakis, whose relationship with the country’s creditors had become increasingly antagonistic, may have reassured traders that a deal between Greece and its creditors could still be reached.

More than 61% of Greeks voted “no” to the reform proposals. The measures, which were submitted on June 25, had since been withdrawn by the creditors.

Eurozone leaders are scheduled to meet Tuesday in Brussels to work out their response to the Greek vote. German Chancellor Angela Merkel and French President François Hollande are set to meet Monday.

Some analysts see the referendum’s outcome giving Greek Prime Minister Alexis Tsipras more leverage in his negotiations with the country’s creditors. Angus Campbell, senior analyst at FxPro, said that “if [Greece’s creditors] want to keep the eurozone intact, better terms will need to be offered.”

Others see the outcome raising the odds Greece will leave the euro.

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