Euro at Four Month Low vs. Pound

The troubled euro fell to a one week low against the US dollar and a four month low vs. the pound. EU finance ministers met to discuss the Greek fiscal crisis and the unreliability of Greek statistics. The ministers believe that Greece has misled fellow EU nations about the size of its debt and are running out of patience with Greece. Rob Minikin of Standard Chartered in London stated, “The Greek developments are definitely casting a shadow on the euro. It underlines how a strong euro could compound problems in the region, and reinvigorates the argument for a weaker euro.” The ministers from the 16 nations that use the euro as a common currency are meeting in Brussels to look at plans to curb Greece’s massive debt. Last week the European Commission said there were “severe irregularities” in Greek data used to calculate the nation’s debt.

Greece’s Credibility at Stake

Last month Fitch Ratings, Moody’s Investors Service and Standard & Poor’s lowered their ratings for Greece boosting concerns about a possible Greek debt default. On January 13th Moody’s said that the economies of Greece and Portugal faced a “slow death” by dedicating more of their already strapped resourced to paying debts. Jeremy Stretch of Rabobank International said, “It’s all about credibility and perceptions, and if there’s a building credibility gap on Greece, the euro will come under pressure. The Greek finance minister will give a presentation, and the question is whether it will be perceived as credible.” At the present time Greece is widely seen as the EU’s weakest member nation.

Bank of Japan to Continue Current Policies

The yen fell against 12 of the 16 most traded currencies on Monday. Bank of Japan Governor Masaaki Shirakawa said that the BOJ will continue its current policy of fighting deflation. Shirakawa told a quarterly meeting of regional branch managers, “The central bank is aiming to maintain an extremely accommodative financial environment.” US markets are closed for the Martin Luther King holiday.

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