Czech gets 100 billion Euros to save debt ridden banking system

Czech gets 100 billion Euros to save debt ridden banking system

The Euro has seen its largest jump in over 6 months against the US dollar. The currency rose to a two week high after Spain went cap in hand to the EU asking for up to 100 billion Euros to save it’s debt ridden banking system. The move followed weeks of escalating concern that bad loans at Spain’s lenders might overwhelm public finances.

The dollar and yen fell on decreased demand for refuge assets as shares rallied. Due to the ongoing uncertainty with the upcoming Greek elections and fresh concerns emerging from Italy it is expected that the Euro’s gains against the greenback will be short-lived. The euro had dropped 4.6 percent against the greenback since the start of May amid concern Greece will leave the common currency. The nation is scheduled to hold elections on June 17 after the previous vote last month failed to produce a viable governing majority.

Despite the back slapping amongst European leaders many economic observers are predicting that Spain’s problems are far from over.

The growth outlook for most of the euro area is already bleak,” Guillermo Felices, head of European currency strategy in London at Barclays Plc, One way to spur growth would be the ECB easing to weaken the euro. Otherwise, without growth, the euro will remain under pressure.”

The euro strengthened 0.7 percent to .2600 after it earlier climbed as much as 1.2 percent to .2671, the highest since May 23. That’s the biggest single day advance since Nov. 30. The euro jumped 0.8 percent to 100.23 yen. The dollar added 0.1 percent to 79.54 yen.

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