The euro was seen rising in the market on Friday following the news that Cyprus is going to find a solution to help strengthen the country’s economy. With the hopes that Cyprus will successfully come out of the financial turmoil, the currency recorded its first weekly gain since early February.
Cyprus has officially announced that the country would be closing a deal very soon that would bring them the required bailout money to avert the financial crisis. Eurogroup finance ministers from 17 nations of the euro zone are going to meet and discuss the Cyprus deal. The meeting will possibly suggest a path for Cyprus to bail out the crisis and lead the nation’s economy on the positive track.
However, Cyprus is very positive about the current developments and the leaders of the country are very much confident that they will crack the deal and will raise enough money required for the bailout. The sources say that the country is about to close a deal where the Greek units that are lying with the indebted banks of the country will be spun off.
Cyprus needs to raise 5.8 billion euros in order to avert the meltdown of its economy, and the European Union has set a deadline of Monday to raise the money. By raising 5.8 billion euros, the country will be able to secure an international lifeline amounting 10 billion euro. This underlines how this fund is important for the financial well-being of the country and why it is desperate to close the deal and raise the fund.
In case, if Cyprus fails to raise the fund, the European Central Bank will cease to extend its monetary support to the banks in Cyprus and this may further deepen the financial situation in the country, since banks are already debt-ridden in the country. Moreover, it may force Cyprus to exit the euro, and the nation will become aloof in the euro zone, in such a situation.
Experts feel that Cyprus will make all possible efforts to avert such uncertainties and help better its economic situation. However, many feel that the deal which the nation is talking about is still far from the reality. At the same time, numerous currency strategists are doubtful that Cyprus will be able to raise the necessary funds within the deadline set by the EU.
Despite amidst such uncertainties the euro registered a 0.7 percent growth in the currency market to reach at $1.2994. Earlier in the last week, the currency plunged to its four-month low reaching to $1.2843, when Cyprus rejected a bailout plan, in which a proposal was made to impose taxes on bank deposits. In exchange of this, Cyprus was offered a European Union bailout. Now, Cyprus is moving in the right direction to bail out its economy and the country’s positive movements helped the euro to move northward in the currency market.
Cypriot leaders are trying to close a deal with their international lenders and if they become successful, it will help bringing somehow market stability for the euro.