Forex News: Eurogroup Decided Greek Aid Package, EURUSD Drifts
THE TAKEAWAY: Eurgroup leaders decide Greek aid package > Greece must meet terms before receiving aid > EURUSD little changed
The Euro was little moved as Eurogroup members reached a contingent solution on Greece’s fiscal sustainability measures. The Eurogroup stated during their press conference today that Greek uncertainty has been relieved and complimented the Greek government for their strong commitment towards achieving a sustainable path.
According to the written statement released today, Greek aid “contingencies” would provide that Greece must continue to build its reserve account which is used to pay down debt, while the IMF is requiring that Greece must retire a portion of its outstanding sovereign debt. However, this task may be challenging as the statement also recognized the “deterioration” to the economy which may lead to cash flow troubles.
If the conditions are met, then officials would be “prepared” to vote in measures such as reduced interest rates along with deferred payments of both principal and interest on outstanding debt. Also Greece may receive kickbacks from member states from profits earned on the Securities Market Program. Furthermore, the Eurogroup would consider added measures, like lowering borrowing costs even more, if Debt to GDP ratios of 175%, 124% and 110% are met by 2016, 2020, and 2022 respectively.
Assuming all minimum requirements are met and such measures are voted in, the EFSF would issue Greece a 43.7 billion euro aid package.
EUR/USD, 15 Minute Chart
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