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By Nick, March 30, 2012 1:58 pm

The Hungarian forint gained today after European finance ministers agreed to boost the bailout fund, leading to hope that Hungary may be able to resolve its debt problems.

European finance chiefs agreed to bolster the firewall against the debt crisis at today’s meeting in Copenhagen. While they are aiming to help mainly Greece, Ireland and Portugal, the increase of the bailout funds may also be beneficial to Hungary. The country is the most indebted among eastern nations of the European Union and has sought help from the EU and the International Monetary Fund for the second time since 2008.

Adam Keszeg, the analyst at Raiffeisen Bank International AG, wrote:

We are still of the view that all parties want to sign the agreement eventually, and thus expect notably lower yields in the summer to come.

The forint has gained 6.7 percent in the past three months, the biggest advance since the second quarter of 2009. The currency was the second-best performer worldwide in this period after the Polish zloty.

USD/HUF fell from 221.56 to 220.57 and EUR/HUF went down from 294.9600 to 294.4500 as of 19:56 GMT today.

If you have any questions, comments or opinions regarding the Hungarian Forint, feel free to post them using the commentary form below.

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By Nick, March 30, 2012 8:33 am

Euro is seeing a boost today as financial ministers in the eurozone agree to raise the firewall meant to contain the spread of sovereign debt crises to 800 billion euros. The move is only temporary, though, and designed to help the eurozone navigate the tricky waters expected over the next year or so. By June 2013, the permanent capacity is supposed to be set at 500 billion euros.

The news is helping the euro, though, by providing a measure of security and proving that eurozone leaders can be proactive in preventing further problems like those seen with Greece. The 800 billion euros represents the combined firepower of the EFSF (a temporary facility) and the ESM (the permanent facility). Once the EFSF stops making new loans, only the ESM will remain, with its 500 billion euro capacity.

Additionally, the new Spanish budget has been presented, and the government has cut 120 billion euros from the budget, instituting a measure of austerity. There are hopes that this will be enough to prevent collapse, and help Spain get back on track — even if the country needs the help of the firewall. For now, the news is good enough to give the euro an edge, though, especially when combined with optimism about the US economy.

At 13:43 GMT EUR/USD is up to 1.3348 from the open at 1.3306. EUR/GBP is up to 0.8343 from the open at 0.8335.

If you have any questions, comments or opinions regarding the Euro, feel free to post them using the commentary form below.

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By Nick, March 28, 2012 7:33 am

Euro is struggling today after seeing some earlier gains. Some of the risk appetite from earlier has been erased, replaced by continued concerns about the eurozone. Even an Italian bond sale and a budget in Spain can’t completely stave off the worries about what’s next.

Also unable to completely do away with Forex trader concerns about the eurozone is the discussion over how to boost the firewall. The emergency bailout funds were deemed insufficient by the OECD, and European leaders are trying to figure out how to boost the fund. One of the suggestions is to pay into the firewall more quickly so that funds are available earlier.

For now, there is enough risk aversion to weigh on the euro. Concerns about a flat durable goods reading in the United States, as well as persistent concerns about the eurozone economy, are causing struggles in the market. Equities can’t seem to eke out gains in early trading, and that is also weighing on high beta currencies like the euro that receive a boost from risk appetite.

At 14:19 GMT EUR/USD is lower at 1.3301 down from the open at 1.3315, but still higher than the session low of 1.3292. EUR/GBP is higher at 0.8386, up from the open at 0.8347. The uncertainty in Britain continues to weigh on the pound. EUR/JPY is lower at 110.5530, down from the open at 110.7650.

If you have any questions, comments or opinions regarding the Euro, feel free to post them using the commentary form below.

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By Nick, March 27, 2012 7:03 am

Earlier today, euro got a boost from what many saw as a successful Italian bond sale, as well as yesterday’s speech from Ben Bernanke opening the door for QE3 in the United States. However, the euro is pulling back right now as the situation changes a little bit. The OECD said that the eurozone needed a much larger firewall in order to contain the debt crisis. The result of this latest piece of news is that the euro is dropping.

With sale of almost 3 billion euros in bonds, Italy staged a successful sale. The news helped boost the euro to a new high for the month of March. Additionally, the US dollar was undermined against the euro with the help of remarks from Federal Reserve Chair Ben Bernanke indicating that another round of quantitative easing could still be coming up.

Things started turning for the euro, though, when the Organization for Economic Cooperation and Development got involved. Right now, the fire power of the eurozone’s bailout facilities is at around 700 billion euros. The OECD doesn’t feel as though that’s enough. The OECD suggests that 1 trillion euros is needed. The news that the eurozone’s firewall could be inadequate is sending the 17-nation currency down against the greenback right now.

At 13:27 GMT EUR/USD has retreated to 1.3331 from an earlier high of 1.3388 and the open at 1.3359. EUR/GBP is lower at 0.8343, down from the open at 0.8365.

If you have any questions, comments or opinions regarding the Euro, feel free to post them using the commentary form below.

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By Nick, February 26, 2012 7:32 pm

Feb 26, 2012 17:15 EST

G20: Bigger euro firewall needed before more IMF funds

The eurozone will have to put in place a bigger financial firewall to combat the crisis before other countries will pour more cash into the IMF, the G20 top and developing economies said Sunday.

In a statement released after a meeting of the group of 20 finance ministers and central bankers here, the G20 said: “Euro area countries will reassess the strength of their support facilities in March.

“This will provide an essential input in our ongoing consideration to mobilize resources to the IMF.”

Calls on the eurozone to boost their crisis-fighting war chest dominated the meeting here in Mexico City, with top officials such as US Treasury Secretary Timothy Geithner saying it was essential to prevent more fallout worldwide.

At a crunch two-day summit in Brussels starting on Thursday, EU leaders will debate whether to combine their current firewall, the EFSF, with a permanent pot due to come into effect in July.

This would give the debt-wracked 17-nation zone a total fund of some 750 billion euros ($1 trillion).

To add even more firepower, the eurozone has called on countries outside the bloc to bolster the IMF resources. IMF chief Christine Lagarde has said the fund needs an additional $500 billion.

“Progress on this strategy will be reviewed at the next minister meeting in April,” the statement said.

Eurozone countries themselves have already committed 150 billion euros to the IMF in the hope of reassuring the markets they have the resources to tackle a re-emergence of the crisis.

But countries outside the zone, including the United States, Britain, Japan and China insisted at the G20 meeting here that the eurozone first puts its hand in its pocket.

Britain’s Finance Minister George Osborne said a trade-off had to be made.

“We are prepared to consider IMF resources but only once we see the color of the eurozone money and we have not seen the color of the eurozone money,” he told Sky News on the sidelines of the meeting.

However, the major sticking point to an increase in the eurozone firewall remained Germany — the bloc’s top economy and political powerhouse.

Finance Minister Wolfgang Schaeuble made no bones of Berlin’s opposition to pouring in more cash to the pot, saying it “didn’t make any economic sense.”

Schaeuble also played down the chances of success at the March 1 and 2 summit saying that a decision on a strengthened firewall would be taken “in the course of March,” recalling that “March runs from 1 to 31.”

Nevertheless, he also noted that a decision in March would be “timely” given the IMF discussion on more resources a month later.

A senior G20 official said that Europe was carefully managing the sequence of steps needed to put in place all the building blocks for a total deal — bigger eurozone fund plus more IMF funds — that would finally douse the crisis.

And while piling on the pressure on Europe to sort out its problems, the G20 statement also heaped praised on policymakers for the measures already carried out, notably in crafting a second bailout package for recession-mired Greece.

“We welcome the important progress made by Europe in recent months to strengthen their fiscal positions, adopt measures to reduce financial stress… and to put Greece on a sustainable path,” the statement said.

Nevertheless, while the crisis has abated in recent weeks, the G20 warned that “growth expectations for 2012 are moderate and downside risks continue to be high.”

The statement said the top economies were “alert to the risks of higher oil prices and welcome the commitment by producing countries to continue to ensure adequate supply.”

Source: AFP Global Edition

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