The speculation over Spain’s bailout plans helped euro to rise against dollar on Friday. The news doing rounds in the market that Spain will seek financial aid in order to overcome country’s financial crisis finally helped euro to jump significantly in choppy trade ahead of the weekend, reaching very close to its four-and-a-half-month peak value.
The euro recorded a 0.4 percent rise reaching to $1.3023, which is much closer to its four-and-a-half-month high of $1.3169 that it had gained last Monday only. On the other hand, the dollar went southwards against the basket of currencies. The dollar recorded a 0.3 percent low and slipped to 79.131 versus the basket of currencies. This is dollar’s very low value very much nearer to its six-and-a-half-month low value of 78.601, which had resulted following the Federal Reserve’s aggressively relaxing monetary policies.
Despite this significant gain, most traders feel that there are still uncertainties surrounding the currency’s growth and it will keep struggling in the coming days to gain a significant value in the market. However, since it was the last day of the week, the volume was thin and the currency’s potential will largely depend on Spain’s capability of brining financial aids to ease the debt situation in the country.
Amidst all uncertainties about the timings of Spain’s possible bailout, analysts feel that Spain may consider freezing employee pensions and employees may witness a rise in the age for retirement. The nation will endeavor to meet such conditions in order to seek international aid coming to rescue the nation from the worsening debt crisis. However successful Spain would be in its attempts, the news of this bailout boosted the market sentiments helping the euro, feel most of the market strategists who are closely watching the developments in the euro zone.
On the other hand, many feel that because of quantitative easing by the U.S. Federal Reserve, the dollar will still take longer time to gain strength in the market. Consequently, it seems that the euro will remain somehow more stable in the market. Many currency strategists are thus pretty hopeful that euro may rise further in the coming month. It is being expected that the currency may go beyond $1.31 and may reach somewhere between $1.34 and $1.35. However, according to them, the positive results regarding the currency will depend a lot on Spain’s success in attracting the international funding.
The news is that after countries that are facing a debt crisis in the euro zone, namely Greece, Ireland and Portugal, Spain has been showing an apprehension for applying for external funding. Thus, the nation is contributing more to the market uncertainties. This is the reason why all eyes are set on Spain and the country has emerged as a new focal point with respect to the revival of the euro. While the country’s borrowing costs has started showing its southward movements, still experts feel that the bailout effects could be short-lived, helping a little to the nation’s debt scenario and also the market position of the euro.