{"id":520619,"date":"2010-04-08T11:28:00","date_gmt":"2010-04-08T15:28:00","guid":{"rendered":"e2249889-c78b-43e3-9643-b1d7d4aa587b:420385"},"modified":"2010-04-08T11:28:00","modified_gmt":"2010-04-08T15:28:00","slug":"is-euro-sell-off-overdone","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/520619","title":{"rendered":"Is euro sell off overdone?"},"content":{"rendered":"

\nThe euro is suffering due to a big fat Greek headache<\/a>. Worries that the country will default on its debt, and stall a recovery on the continent, pushed the currency down to a two-week low against the U.S. dollar.<\/p>\n

But one currency watcher says euro concerns might be a little overdone.\n<\/p>\n

\u201cThe market does need to learn that Greece comprises just over 2% of the eurozone GDP. As such, at some point, we believe, the market will need to get used to Greece's woes,\u201d said Axel Merk, president and chief investment officer at Merk Investments. \u201cThere's life beyond Greece; as a result, we are positive on the long-term outlook of the euro.<\/p>\n

Mr. Merk\u2019s company runs three currency funds, one of which \u2013 the US$440-million Merk Hard Currency Fund \u2013 counts the euro as its biggest holding (the Canadian dollar ranks a close second).<\/p>\n

He noted the spread on Greek bonds over German equivalents hit a new high (peaking at 442 basis points), which he believes is appropriate. Nevertheless, he argued some market participants are failing to take into account some factors that are weighing on the euro. The whole note argument is here<\/a>, but in short, he says:<\/p>\n

\u2022 Should the International Monetary Policy get involved, the loans it would grant would be senior to outstanding government debt. \u201cIt is absolutely justified by the market to demand a higher premium on outstanding debt given the prospect of IMF involvement.\u201d<\/p>\n

\u2022 With IMF involvement, there's a high probability that existing debt may be restructured. \u201cPolicy makers don't like to call debt restructuring a default, but it is a partial default that may trigger payment under CDS rules. As a result, it is perfectly appropriate for credit default swaps to rise.\u201d\n <\/p>\n

Paul Vieira <\/a><\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

The euro is suffering due to a big fat Greek headache. Worries that the country will default on its debt, and stall a recovery on the continent, pushed the currency down to a two-week low against the U.S. dollar. But one currency watcher says euro concerns might be a little overdone. \u201cThe market does need […]<\/p>\n","protected":false},"author":4060,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-520619","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/520619","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/4060"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=520619"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/520619\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=520619"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=520619"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=520619"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}