12 May 2015
Greece very close to run out of money – BTMU
FXStreet (Barcelona) - With Greece making an early repayment of EUR 750mn, Derek Halpenny, European Head of GMR at Bank of Tokyo-Mitsubishi UFJ, argues that news reports suggest the repayment was done using some IMF reserve funds, and Greece needs an agreement by this month end to avoid running out of money.
Key Quotes
“While UST bond yields have crept higher, so have German bund yields and this is helping to support the EUR/USD rate. Still, while the momentum is still very strong in the bund market for higher yields, the appetite for euro buying has certainly faded and the strong correlation of rising yields and a rising euro is weakening. This is largely down to US yields now rising also as optimism over a rebound in the economy there picks up.”
“The uncertainty over Greece may also be a factor. As each day goes by the risk of some messy end to this brinkmanship increases. The deadline is being pushed back after Greece made a loan repayment of EUR 750mn yesterday.”
“The Greek newspaper Kathimerini is reporting that Greece used up some IMF reserve funds to make the payment. However, these reserves must be replenished within a month and were it not for permission being granted by the IMF for the reserve to be used, Greece would have been unable to pay yesterday.”
“With state wages and pensions payments dependent on more cash reserves from state municipalities being used, the signs are that Greece is now very close to running out of money and that a deal will need to be reached by the end of the month.”
Key Quotes
“While UST bond yields have crept higher, so have German bund yields and this is helping to support the EUR/USD rate. Still, while the momentum is still very strong in the bund market for higher yields, the appetite for euro buying has certainly faded and the strong correlation of rising yields and a rising euro is weakening. This is largely down to US yields now rising also as optimism over a rebound in the economy there picks up.”
“The uncertainty over Greece may also be a factor. As each day goes by the risk of some messy end to this brinkmanship increases. The deadline is being pushed back after Greece made a loan repayment of EUR 750mn yesterday.”
“The Greek newspaper Kathimerini is reporting that Greece used up some IMF reserve funds to make the payment. However, these reserves must be replenished within a month and were it not for permission being granted by the IMF for the reserve to be used, Greece would have been unable to pay yesterday.”
“With state wages and pensions payments dependent on more cash reserves from state municipalities being used, the signs are that Greece is now very close to running out of money and that a deal will need to be reached by the end of the month.”