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Response to Demeter (Reply #3)

Mon Mar 25, 2013, 07:07 AM

11. Euro back above $1.30 after Cyprus deal; Several analysts remain wary

http://www.marketwatch.com/story/euro-back-above-130-after-cyprus-deal-2013-03-25?siteid=YAHOOB

PAPERING OVER YET ANOTHER TBTF BANK...AND USING CHEWING GUM TO HOLD THE EURO TOGETHER

The euro rose against the dollar and other major currencies Monday as news of Cyprus’s bailout agreement with its international lenders eased worries of its exit from the common currency bloc and led investors to take on more risk...Despite the relief rally in risk assets on Monday, several analysts remained wary about the implications from the agreement.

“This deal calls into question the safety of bank deposits, as the next time one of these countries asks the European Central bank for funding, the bank could come back and tap them on the shoulder with a similar deal Cyprus has now agreed to,” said Evan Lucas, a strategist at IG Markets.

“Risk premiums will increase on this deal, as will market fragmentation this Band-Aid deal will have ramifications,” he added.


The broad terms of the agreement cleared the path for Cyprus to receive up to €10 billion, while sparing depositors with less than €100,000 in their bank accounts from any losses. The Eurogroup also announced a restructuring of the two largest Cypriot banks, with the Popular Bank of Cyprus — also known as Laiki Bank — to be split into a “good” and a “bad” bank. The good bank will then be folded into Bank of Cyprus, along with all of its insured deposit accounts of under €100,000 and all performing assets. Deposits of more than €100,000 would be retained in the residual, so-called bad bank. Details of how much of a haircut larger deposit-holders would have to take weren’t disclosed...

OF COURSE NOT! CUTTING A DEAL WITH RUSSIA...

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LineLineReply Euro back above $1.30 after Cyprus deal; Several analysts remain wary
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