The single currency is higher on the session following speculation of a Greek repayment extension, despite the fact that bailout aid isn’t expected to be forthcoming.
With Euro finance ministers meeting today in Brussels, it ishighly likely that policymakers will allow a two year extension for Greece to repay its loans. The decision is being made on the heels of the most recent Greek austerity package passing last night in a midnight session of Parliament and speculation that the troubled Eurozone member will miss some of its benchmark targets this year and next. The extensions are expected to add approximately 32 billion euros in costs to the current measure, but should alleviate some pressure on the Greek economy to meet its ultimate primary surplus and debt to GDP ratio reduction goals. Currently, Greek officials are expected to reach a primary surplus of 4.5% of GDP by 2014 and an overall debt load of 120% of GDP by 2020.
Incidentally, the $41 billion necessary to keep the Greek government running will likely be released later this month. Policymakers continue to demand further details as provided by a more comprehensive Troika assessment. Finance ministers will only be afforded a brief analysis of the current state of Greek affairs at tonight’s meeting –supporting speculation that a decision on bailout aid will be delayed for a further couple of weeks.
Notably, sovereign credit default swaps continue to price in a Greek default and exit from the region.
As a result of the extension news, the single currency is trading slightly higher on the session, rising by 0.02% against the US dollar and 0.14% against pound sterling. Additional cross pairs are showing gains against the Euro – with the largest being a 0.44% decline against the Australian dollar.
