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Traders and hedge funds are making record bets against the euro, underlining the mounting alarm over the region’s debt crisis.
Market players have bet almost £5billion that the value of the currency will fall against the U.S. dollar, the largest ‘short position’ since it was launched.
European governments have been drawing up plans for a possible bail-out of Greece, amid fears it could be spiralling towards debt default.
Worries about the health of public finances are also spreading to other countries.
Speculators believe these states will be unable to meet their obligations to lenders and have taken up a short position on the currency.
More than 40,000 deals have been made betting against the single currency, according to analysis of figures from the Chicago Mercantile Exchange.
Some analysts claim the crisis is so deep the future of the euro could be put in peril, driving the value of the single currency lower.
The numbers underline the growing sense of panic about the euro zone’s ability to cope with the government debt turmoil.
Politicians are desperately trying to convince market players that they are serious about taking the debt-cutting measures needed to shore up their national finances.
Traders have taken out record-breaking short positions on the euro, betting that the Greek debt crisis drives the value of the currency lower.
But in Greece, the eye of the current storm, opposition to public spending cuts is growing.
Some 600,000 state workers, from teachers to tax collectors, are planning to strike for 24 hours later this week as they protest the austerity measures planned by Prime Minister George Papandreou.
Fiscal woes are hardly confined to the euro zone, however. British government bonds took a fresh hit amid claims the UK bears alarming similarities to those of Greece, Portugal and Spain.
Popular Alliance Comment:
This saga teaches us two lessons, one that the euro is inflexible and cannot allow individual states room to manoeuvre their way out of financial crisis and secondly that the UK is alarmingly similar to Greece and will need some serious action to prevent total financial collapse and massive devaluation of the pound.
Unfortunately our government is run for votes and power and not for the good of the country. |
