Share

Euro picks up after Greek finance minister quits

Tokyo - The euro rose on Monday after Greece's Finance Minister Yanis Varoufakis announced his shock resignation, just hours after the cash-strapped nation rejected creditors' austerity demands in a landmark weekend referendum.

In Tokyo, the unit fetched $1.1088 from around $1.1027 before the announcement, and after dropping to $1.0963 in New York electronic trade Sunday in response to the vote, which increases the chances Greece will crash out of the eurozone.

The single currency also picked up to ¥135.46 from ¥134.82 earlier on Monday.

The combative Varoufakis - who has been at the centre of Athens' high-profile debt negotiations for months - clashed with Greece's creditors and refused to bow to their demands for tough austerity.

While the referendum was a victory for the government, Varoufakis suggested he could be an impediment to future debt talks.

READ: Greek Finance Minister Yanis Varoufakis quits

"Soon after the announcement of the referendum results, I was made aware of a certain preference by some Eurogroup participants, and assorted 'partners', for my... 'absence' from its meetings," Varoufakis wrote.

It was "an idea that the Prime Minister judged to be potentially helpful to him in reaching an agreement. For this reason I am leaving the Ministry of Finance today."

Despite the pick-up in Asia, the euro was still down from Friday's levels with investors flocking to the Japanese currency, a safe haven in times of turmoil.

In other trading, the dollar weakened to ¥122.52 from ¥123.05 on Friday.

"It's hard to see how risk assets can rally for an extended period in this kind of toxic environment, at least in the near-term," said Chris Tedder, a research analyst at Forex.com in Sydney.

"We need more clarity on how this is going to play out."

'Spill-over risks'

There were widespread fears that the euro would plunge in the aftermath of a "No" vote, but analysts said investors were trying to work out the broader impact of Sunday's vote.

"There is no particular reason for the euro to be holding up, but markets are still assessing the spill-over risks in the case of a Greek exit from the eurozone," said Shinya Harui, currency analyst at Nomura Securities in Tokyo.

"I personally think the chance (of the Greek exit) is very high, at around 70% to 80%," he added.

"A Greek exit would shake confidence in what had been 19-nation solidarity, which could fuel anti-euro movements within Europe."

As Greece was unable to repay a key International Monetary Fund debt, it cannot borrow money from global institutions and will be shut out of financial markets, Harui warned.

"Inflation risks (in Greece) are very high... People voted 'No' without being fully aware of the ensuing risks," he said.

Greek Prime Minister Alexis Tsipras had campaigned against accepting debt reform proposals from Greece's creditors - the European Central Bank, the European Commission and the International Monetary Fund (IMF) - claiming a "No" vote would strengthen his hand in negotiations.

READ: Greeks defy Europe with overwhelming 'No'

But Jeroen Dijsselbloem, leader of the Eurogroup of eurozone finance ministers, who had warned ahead of the poll that a "No" vote would likely lead to Greece exiting the single currency, described the result as "very regrettable".

"The 'No' vote is the worst possible outcome from an 'uncertainty' perspective," said Ray Attrill, global co-head of forex strategy at National Australia Bank.

In other trading, risk aversion weighed on some emerging market currencies.

The dollar rose to 13 360 Indonesian rupiah from 13 306 rupiah on Friday, to 63.59 Indian rupees from 63.37 rupees and to 33.85 Thai baht from 33.78 baht.

The greenback also climbed to 1 125.70 Korean won from 1 120.83 won, to Sg$1.3513 from Sg$1.3499, to 45.13 Philippine pesos from 45.11 pesos, and to Tw$30.94 from Tw$30.88.

It rose to a multi-year high of 3.8085 Malaysian ringgit from 3.7775 ringgit.

The Australian dollar fell to 74.82 US cents from 75.84c while the Chinese yuan slipped to ¥19.69 from ¥19.82.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
19.08
-0.9%
Rand - Pound
24.03
-0.6%
Rand - Euro
20.57
-0.5%
Rand - Aus dollar
12.38
-0.2%
Rand - Yen
0.13
-0.9%
Platinum
890.97
-0.7%
Palladium
988.99
-1.3%
Gold
2,195.56
+0.0%
Silver
24.43
-0.9%
Brent Crude
86.09
-0.2%
Top 40
67,885
+0.3%
All Share
74,077
+0.2%
Resource 10
56,208
+1.0%
Industrial 25
103,636
+0.4%
Financial 15
16,471
-0.3%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders