The commissioner for economic and monetary affairs Olli Rehn received a bit of a kicking at Wednesday’s session of the European parliament as Euro MPs slammed the handling of the Cyprus bailout blaming the European Commission for not defending depositors and slammed politicians for having double standards.
Olli Rehn opened the debate by saying that the commission had wanted a more gradual adjustment for Cyprus, but that it was not possible as member states were contributing just €10 billion. Instead the commissions handling of the affair will now lead to the inevitable destruction of the Cypriot financial system and plunge the nation into potentially a decade’s long period of hardship.
The Austrian leader of the S&D group criticised Germany for behaving in a ‘near colonial way’ and called for the Commission to disband the troika, the partnership between the Commission, European Central Bank and International Monetary Fund that oversees the implementation of bailouts.
Takis Hadjigeorgiou, a Cypriot member of the GUE/NGL group, accused the EPP political family of having double standards, by supporting the Cypriot cause within the EP, but not within the Euro group. He also criticised the Council for imposing measures on Cyprus which it would never apply to larger countries. Nigel Farage the leader of UKIP accused the Commission of criminal behaviour, robbing people to prop up the Euro and claimed that confidence was non-existent in the single currency.
Confidence among Euro traders must be very low as even just the hint of a negative rumour sent the Euro weaker against the US Dollar.
Speculation over a possible credit downgrade for the Eurozone’s largest economy has seen European stock markets weaken and pushed the Euro down against a number of its peers.
“Equity markets took a sharp leg lower in Europe, giving back early gains as rumours of a German downgrade sparked heavy selling,” said Matt Basi, head of sales trading at CMC Markets UK.”The market reacting so drastically to idle chatter of this nature is probably less indicative of any belief in the gossip than of the general nervousness amongst traders, as the bleak macro backdrop combines with wild commodity swings, acts of terrorism and unravelling geopolitical situations in North Korea and Israel to undermine investor confidence.”
As of 14:50 pm GMT
The Euro to Pound Sterling exchange rate is currently trading in the region of 0.8618
The Euro to US Dollar exchange rate is currently trading in the region of 1.3127
The Euro to Australian Dollar exchange rate is currently trading in the region of 1.2703
The Euro to New Zealand Dollar exchange rate is currently trading in the region of 1.5510