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19 Mar 2013
Forex Flash: Cypriot storm follows Eurozone calm - BTMU
FXstreet.com (Barcelona) - Derek Halpenny, European Head of Global Markets Research at the Bank of Tokyo Mitsubishi UFJ notes that after a long time of relative calm in euro-zone financial markets, we are back to headline watching as we await the outcome of the parliamentary vote from Cyprus.
He notes that the Euro has dropped a bit this morning on news from CNBC that the Cypriot president has told Angela Merkel that parliament will not pass the bank deposit tax legislation. He feels that it is unclear that the most logical and now necessary step that needs to be taken is for the levy under EUR100k to be scrapped and for this revenue to be raised through either the levy over EUR 100k being raised or through tax measures. He writes, “Assuming this is where we finally get to with this Cyprus fiasco, we can probably then assume that financial market stability will be restored. However, the longer the indecision lasts, the greater the risk that we see a more notable drop in EUR/USD as fears increase over a bank collapse or departure of Cyprus from the euro-zone. We assume sense will prevail.”
He notes that the Euro has dropped a bit this morning on news from CNBC that the Cypriot president has told Angela Merkel that parliament will not pass the bank deposit tax legislation. He feels that it is unclear that the most logical and now necessary step that needs to be taken is for the levy under EUR100k to be scrapped and for this revenue to be raised through either the levy over EUR 100k being raised or through tax measures. He writes, “Assuming this is where we finally get to with this Cyprus fiasco, we can probably then assume that financial market stability will be restored. However, the longer the indecision lasts, the greater the risk that we see a more notable drop in EUR/USD as fears increase over a bank collapse or departure of Cyprus from the euro-zone. We assume sense will prevail.”