EE:Euro exchange rate today: Currency looks overvalued at current levels
The euro dollar exchange rate is 0.447% higher on the day with 1 EUR = 1.4146 USD.
The pound to euro exchange rate is 0.048% lower on the day with 1 GBP = 1.1389 EUR.
"A stronger day for European stocks looks to have been the key factor propelling the euro forward yesterday. This pair is currently trading at $1.4150, which again looks a little too strong amid prevailing eurozone uncertainty and could be corrected downwards today," says Richard Driver, currency analyst at Caxton Fx.
What the ECB says:
Meanwhile we note that Greek Finance Minister Venizelos said that Greece has not yet accepted that a ‘selective default’ rating is inevitable.
He said that if the ECB is no longer in a position to support Greek banks, liquidity could be made available via the EFSF or via the wider system of national central banks. This suggests that the possibility is being explored of using an emergency liquidity facility operated by the Greek central bank to help fund Greek banks if the ECB finds itself unable to do so.
ECB Governing Council member Nowotny said a Greek default would have very grave consequences. He added that a range of options still has to be studied, and that some of these proposals are intended to manage the aftermath of a short-term selective default rating.
ECB Executive Board member Bini-Smaghi repeated the ECB’s opposition to imposing actual losses on private sector bondholders, arguing that doing so could cost taxpayers even more. He said that, given the Greek banks “would collapse” in this case, the EU would have to bail out both the Greek economy and the Greek banks which would be “a much more expensive proposition”.
ECB President Trichet indicated there has been no softening of the ECB’s position on Greece. He repeated that any solution for Greece has to avoid both a credit event and a selective default, and that it is the responsibility of governments to come up with a solution. He said he does not expect the debt crisis to cause another recession.
The ECB did not settle any bond purchases under the Securities Markets Program last week. Allowing for settlement lead times, this implies that the ECB had conducted no purchases as of the European close on Tuesday. The program has now been dormant for 16 weeks, but could be restarted without warning.
A German government spokesman said that Germany seeks to send a clear signal to markets at the EU summit planned for Thursday.
