It’s not really in Greece’s interest to leave the euro

Published on in Foreign Exchange Reviews by
greek-women

The dollar has weakened against the Euro after Greek opinion polls show that the pro austerity party New Democracy is on course to win the upcoming elections, easing concerns that the embattled nation will withdraw from the Eurozone.

New Democracy leader Antonis Samaras told voters at the weekend; “No society, no economy and no democracy can tolerate such a sudden collapse in so little time.” Samaras warned of the consequences of Greece leaving the Eurozone, that Greeks would face terrible repercussions.

“It’s not really in Greece’s interest to leave the euro,” Charles Lieberman  chief investment officer at Advisors Capital Management LLC, “If Greece departs, their currency collapses, inflation goes through the roof, they have to walk away from all their obligations — and they’re outcasts within Europe. And for what? What does it get them?”

The Japanese Yen has also strengthened against the dollar after the bank of Japan dampened speculation that it was planning to boost monetary easing to keep it within its 1% inflation target.

“Any sign that anti-austerity parties are running out of steam could trigger some unwinding of euro shorts,” said Junichi Ishikawa, an analyst in Tokyo at IG Markets Securities Ltd., said of the Greek opinion polls. “The bias is for the dollar to be sold in that environment.” A short position is a bet an asset’s price will fall.

The dollar fell 0.7 percent to $1.2605 per euro at 8:23 a.m. in London after rising to $1.2496 on May 25, the strongest since July 2010. The U.S. currency weakened 0.4 percent to 79.40 yen. The euro gained 0.3 percent to 100.08 yen.

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