Could the Euro Be Threatened by Rajoy’s Refusal to Ask for Aid?
One of the big questions being asked right now is this: What’s next for the euro? While many Forex traders act as though the eurozone will pull through, the truth is that there has been no real progress in the debt crisis situation, and no plans for preventing something similar from happening in the future.
The big concern right now is what happens if Spanish Prime Minister Mariano Rajoy continues the current policy of refusing to ask for aid from the European Stability Mechanism. So far, Rajoy has been reluctant to ask for aid because it would require austerity measures that would be unpopular with Spanish citizens.
Standard and Poor’s Rating Service just downgraded Spain again. There are hopes that the move will spur action from Rajoy and the Spanish government, but that remains to be seen. So far today, though, the news hasn’t had a hugely negative impact on the euro. The 17-nation currency continues to gain against the US dollar, and risk appetite is providing support.
However, down the road, there could be serious problems. The International Monetary Fund is warning that refusal to ask for aid could mean even bigger problems for Spain — and for the credit market in general.
At 13:15 GMT EUR/USD is up to 1.2938 from the open at 1.2875. EUR/GBP is up to 0.8067 from the open at 0.8044. EUR/JPY is up to 101.5985 from the open at 100.6550.
If you have any questions, comments or opinions regarding the Euro, feel free to post them using the commentary form below.
Earlier News About the Euro:
- IMF Comments Weigh on Euro (2012-10-10)
- Euro Maintains Losses After Draghi's Speech (2012-10-09)
- Euro Stays Lower on IMF Projections (2012-10-09)
- Euro Rallies After Two Week of Losses, Can It Keep Gains? (2012-10-06)
- Euro Gains Against US Dollar on Spanish Bonds and US Jobs (2012-10-05)