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Many people are wondering
what happens next in the currency markets as first the euro was hit by the financial bailout of Greece and worries about Spain
and Portugal.
Then we have the Euro falling two cents against the dollar after Spanish bank Cajasur was taken over by Spanish authorities.
Cajasur ran into trouble due to its exposure to the Spanish housing market like many of the 45 savings banks operating in
Spain but the property collapse has now left these banks with with debts worth 445bn euros, according to Goldman Sachs. The Bank of Spain has taken over
the running of Cajasur, giving it access to 550m euros of emergency funding and at least 16 other Spanish banks are now in
discussions to merge to try and get financial stability. This has led to analysts questioning the ability of the Spanish government
to repay its debts and the IMF has called for major reforms to ensure economic recovery for Spain.
What is for sure nobody knows
what happens next or we would all be making millions from currency speculation against the dollar, sterling, yen, or pound
but forward rates are available and as of the 31/05/2010 these were the forward rates the markets were offering on sterling
against leading currencies.
Euro v Pound
Rate @ 31/05/2009 0.8416
Forecast
September 2010 0.851
Sterling v Dollar
Rate @ 31/05/2010 1.4456
Forecast September 2010 1.4536
With the current turmoil in the financial markets nobody
knows how sound these forecasts are but good to see speculators expexting the pouns to strenghen against the dollar.
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