After broadly declining in reaction to the ECB issuing Cyprus with a testing ultimatum, the Euro posted gains against all of its main peers as speculation mounts that a resolution will be reached.
The Euro Exchange Rate was in the region of 1.2943 against the US Dollar as of 14:17 pm GMT
Although the fiscal security of Cyprus is far from assured, news that Greece is engaged in serious discussions with the island nation allowed the Euro to climb.
Earlier this afternoon the Greek finance ministry asserted that the two Mediterranean nations are working closely together in an effort to stabilise Cyprus’ fragile banking sector, while lawmaker Marios Mavrides commented that the Greek government must approve legislation in order to safeguard Cyprus.
Finance ministers from the EU are expecting Cyprus to propose a means of raising the 5.8 billion Euros required for the activation of emergency loans ‘as rapidly as possible’.
Speculation that the worst of this latest drama may have passed boosted the common currency to 1.2956 US Dollars and 122.87 Japanese Yen, and some industry experts believe a more notable rally could be on the horizon.
Senior currency strategist Paul Robson commented: ‘People are reluctant to head into the weekend short Euro’s just in case we get a deal. There may be expectations that Cyprus will be creeping closer to some kind of deal. If we do get something over the weekend there will probably be a rally next week.’
However, others are less optimistic. One foreign exchange strategist with the Bank of Tokyo-Mitsubishi UFJ Ltd noted: ‘Our best-case scenario is that an agreement will be reached. There’s a lot of uncertainty as we head into the weekend.’
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