Countless meetings were already held, but negotiations between Greece and the creditors always end nil. The talks resumed Saturday, one last chance to avert a Greece default. This might be the determination of whether a deal or a default occurs.
GrexitBanyak among which mention the default condition could lead Greece out of the euro zone. The term Greece Exit, or Grexit, is popular these days to refer to the potential discharge of Greece from the currency block it. Based on a poll held by the YouGov, in several European countries, almost the majority predicted Grexit occurred. As in Germany, 56% of respondents mention Greece out six months again.
Amid the anticipation about the clarity of the fate of Greece, inevitably appear pertanyaaan. Does this weaken or Grexit thus strengthen the euro?
The Reason Why Grexit Weaken The Euro
Trigger disrupsi and turmoil. Terms of terjelas Grexit is an extraordinary event and creating uncertainty. This condition is always negative for currency stability.
Potential deployment. The other argument is when Greece came out, the market is going to ask who's next. Financially and economically, the spread may be small, given the exposure now passes by the creditor and authorities already prepare anticipation. The impact may be more politically visible due to highlight members of the euro failed to get a deal to keep Greece even though it has tried. This reflects the lack of flexibility and the inability of the menganggulangi crisis.
The Response Of The ECB. One scenario occurs when Grexit is the ECB should loosen its policy again. This includes the purchase of bonds and the possibility of adjusting the dramatic loan program (TLTRO). Therefore, the euro zone is not quickly recovered without Greece and it turns out that the country was not the only currency blocks that inhibit it. Other problems will continue and this could affect the image and stability of the euro.
The Reason Why Grexit Strengthen Euro
Let go of weak members make groups more powerful. Although, of course, by issuing the weakest economies will make the whole group stronger and prosperous.
The safe haven flows. Although the money is withdrawn from a portion of zoan euro when Grexit, it is likely to flow to another part, instead of out of it entirely. Especially, the flow can flow into Germany, the Netherlands and France.
Short Squeeze. When the transition happens then it can be magnified by short squeeze given the magnitude of the number of positions against the euro. This happens when the person who sold the euro looking quite close the position because of the increase, which precisely encourages demand for the euro and pushing it higher.
