Angry Protestors Highlight Social Unrest In Eurozone, Currency Remains Under Pressure
The euro has started off Thursday morning steady, opening at 1.2868 despite the International Monetary Fund's recent negative statements about the currency's weakness.
The IMF gave little good news on Wednesday, painting a bleak picture of global economic slowdown and cautioning investors. The biggest blow was to the eurozone, which it claimed was the biggest threat to the global economy. The region's very public struggle first with Ireland and Portugal and now with Spain and Greece is causing a great deal of uncertainty among the markets.
German Chancellor Angela Merkel took a trip to Greece this week, where she was met with an icy welcome from its citizens. She was greeted with protestors who took to the streets upon her arrival to protest the austerity measures imposed by the European Union. Reuters reported that some protestors went as far as dressing as Nazis, a blatant insult to the German people.
Germany has been vocal about its role in bailing out struggling nations. As the largest contributor to bailout funds, Germany has offered much resistance to giving money to any nation that doesn't restructure and take measures to get back on track seriously. This was the message delivered by Merkel to the people of Greece.
As Greece prepares to receive its next installment of their bailout, Merkel cautioned that the country will need to make further cuts. The visit, although a show of solidarity, did little to unite the eurozone or ease investor's minds as social unrest and uncertainty were the main takeaways.
Outside of Greece, Spain is continuing to hold off on requesting a sovereign bailout, with no news of the request coming any time soon. Reuters also reported on Thursday that Standard & Poor's downgraded Spain to a BBB-minus, two marks lower than it was rated previously. This downgrade, though expected, put a bit of downward pressure on the euro.
S&P's rating cited a negative outlook for the country with poor economic growth and risky budgeting as reasons to move the nation just above “junk status”. This rating matches that of Moody's Baa3 rating, which is expected to be reevaluated in the near future.
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