Bloomberg News

Euro Bounce on Aid for Greece May Be Limited, Citigroup Says

June 16, 2011

(Updates prices in third and sixth paragraphs.)

June 16 (Bloomberg) -- A rebound in the euro if the European Union and the International Monetary Fund agree to give Greece an installment of aid will be limited and temporary, according to Citigroup Inc.

“The uncertainty that has been generated by the process is going to continue to weigh on the euro,” said Steven Englander, head of Group of 10 currency strategy at Citigroup in New York, in a telephone interview. “The process itself and the degree to which this process is unsatisfactory become a part of the determination of asset prices.”

The euro today gained 0.2 percent to $1.4204, after touching $1.4074, the lowest level since May 26. The 17-nation currency tumbled 1.8 percent yesterday, the most in six weeks.

Englander didn’t specify how much the euro would fall or bounce back.

“In the near term, the euro still faces challenges,” he said. “If it does bounce, the bounce would be temporary.”

The euro has depreciated 0.3 percent in the past week against nine other developed-nation currencies, according to Bloomberg Correlation-Weighted Currency Indexes. The dollar has rallied 0.8 percent.

Greece’s immediate concern is to obtain 8.7 billion euros ($12.4 billion) from Europe and 3.3 billion euros from the IMF in July, promised as part of last year’s precedent-setting aid package to stave off the euro area’s first default.

European finance ministers will meet on June 19 after an emergency session two days ago broke up without an accord on the next loan disbursement.

--Editors: Dennis Fitzgerald, Dave Liedtka

To contact the reporter on this story: Cecile Vannucci in New York at cvannucci1@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net


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