Spain moved back into the eye of the eurozone storm on Thursday as the country's borrowing costs rocketed to unsustainable levels, and the authorities were forced to deny that one of its biggest banks was in meltdown.
After Thursday night's global liquidation fireworks, the overnight trading session was positively tame by comparison. After opening lower, the Nikkei ended up 1.7% driven by a modest jump in the USDJPY. China too noted a drop in its ultra-short term repo and SHIBOR rate, however not due to a broad liquidity injection but because as we reported previously the PBOC did a targeted bail out of one or more banks with a CNY 50 billion injection.
DUBLIN — Three years after going cap in hand to international lenders, Ireland got the green light on Thursday to step out on its own as the first eurozone country to exit its bailout program.
The European Commission, European Central Bank and International Monetary Fund signed off on the last part of the 85-billion euro (US$114-billion) aid program, paving the way for Ireland – which has met all major targets – to complete it by the end of the year.
NICOSIA — The president of Cyprus said on Friday the risk of bankruptcy had been contained and the country had no intention of leaving the euro, in a speech laden with criticism of Europe’s currency union for “experimenting” with the island’s fate.
Conservative leader Nicos Anastasiades spoke a day after banks reopened following an almost two-week shutdown imposed as the country raced to clinch a rescue package from the European Union.
By FXstreet:The euro resumed its decline versus the dollar late NY session on Tuesday, and extended below 1.2850 today, as investor worries over the eurozone crisis persist and markets are back to trading at the rhythm of European headlines.
Everyone thought 2012 was the year the euro crisis subsided. The ECB finally stepped up to the plate, bringing government borrowing costs in Spain and Italy down from unsustainable levels. Meanwhile, Greece avoided an exit from the euro.
By Carnegie Endowment:
By Uri Dadush, Zaahira Wyne
Italian and Spanish government bond spreads continue to be high and volatile but have declined sharply compared to the levels reached four months ago. The eurozone is back from the brink of disaster; even so, the fiscal difficulties of Europe’s periphery—dangerous as they are—are only a symptom and not the cause of the crisis.
RIGHT now, an awful lot of very smart people are looking at Europe, scratching their heads, and wondering two things:1) Is it possible that the euro zone has actually figured out a way to muddle through this mess?2) Did they somehow do all the things I said they needed to do without me noticing?