1. Why has the euro stayed at 1.34 to the Pound, despite all the “disturbing” news from Greece?
2. Why has the euro gone UP from 1.12 to the $ to 1.14 despite all the “disturbing” news from Greece?
To quote from no less an Establishment source than Bloomberg:
‘[The euro] touched $1.1098 on Monday, the weakest level since September 2003, after the anti-austerity Syriza party won Greek elections that investors speculated may lead the country out of the euro.’
But then the common currency was at $1.1334 this morning…and is at or around $1.14 now.
I understand that the bank run in Greece is accelerating, and Forex outfits everywhere are selling euros by the cartload. Clearly, lots of folks are withdrawing and selling. But the much-adored Single Currency is singularly robust.
Or not. This is beginning to feel more and more like the gold market.
My preferred, considered answer: foreign exchange reserves at the ECB rose quite considerably in recent weeks to over a third of a trillion $US. With such fiat toilet-paper can one myriad euros buy.
There are two obvious reasons for this:
1. Dragula is buying his own currency in order to steady the markets…even though he knows this is a forlorn policy.
2. The ECB/Berlin axis wants to “prove” that Grexit doesn’t bother them….even though it’s obvious it does. (Count Dragula doesn’t care either way, but then the o in his title is silent).
Footnote: Bundesbank foreign currency reserves have gone down.
Draw your own conclusions.