The dollar is currently losing ground against all of its major competitors on Friday. Investors appear optimistic that the government of Cyprus will find a way to raise 5.8 billion euros in the next three days, which will allow the country to receive the EUR 10 billion bailout from EU and the International Monetary Fund.
The Cyprus government is in hard negotiations with the Troika to reach a solution on bailout terms, government spokesman Christos Stylianides said Friday. The country must find a way to raise EUR 5.8 billion in the next three days, which is a pre-requisite to receive the EUR 10 billion bailout from EU and the International Monetary Fund, rumors are rife that the country’s leading lender Popular Bank, or Laiki Bank, is set to close down.
The news triggered public alarm and saw individuals queuing up in front of cash machines to withdraw their savings as much as possible. However, the bank yesterday imposed a limit of 260 euros a day on ATM withdrawals. Fearing closure, hundreds of bank employees and bondholders took to the streets on Thursday. The central bank refuted the rumors.
The dollar reached an early high of $1.2887 against the Euro on Friday, but has since dropped to a one-week low of $1.3001.
Germany’s business confidence deteriorated unexpectedly in March after hitting a ten-month high in the previous month as the turmoil triggered by Cyprus’ bailout debacle and the political uncertainties in Italy hurt sentiment in the largest euro area economy.
The headline business climate index dropped to 106.7 in March from 107.4 in February, which was the highest reading in ten months, data from the Ifo Institute showed Friday. The index was expected to rise to 107.8 in March. The indicator dropped for the first time in five months.
Germany’s leading economic indicator improved for the second consecutive month in January largely on strengthening consumer confidence, the Conference Board said in a report on Friday.
With large positive contributions from consumer confidence and the yield spread more than offsetting negative contributions from new orders in investment good industries, the leading index gained 0.3 percent in January. The index climbed 0.5 percent in December and declined 0.3 percent in November.
Business confidence in France remained unchanged in March after improving in the previous month, and was below economists’ forecast, latest data showed Friday.
The business confidence index for the manufacturing sector remained steady at 90 in March, and was far below its long-term average, statistical office Insee said. In January, the reading was 87. Economists had forecast the index to rise to 91 in March.
The greenback has extended its recent losses against the pound sterling to a third consecutive session on Friday, falling to a one-month low of $1.5243.
The buck has also extended yesterday’s weakness against the Japanese Yen on Friday, reaching a 4-session low of Y94.187.