It’s a much more moderate version of nervousness (and often panic) that we have witnessed in international financial markets at the height of the European sovereign debt crisis. European stock markets have been on a downward trend and interest rates the debt of peripheral countries are rising, but everything has to be done gradually, without drastic fluctuations, revealing that the markets fear a contagion in large scale of the Greek crisis for the rest of Europe is not yet installed.
Portugal, which has been, since 2010, the first country where to look when it comes to the international impact of the Greek crisis is an example of moderate concern that markets are to face the current situation. Since March this year, shortly after the ECB has started buying bonds in European markets, debt interest rates began to rise. In the OT to 10 years, he had reached a record low of 1.57% on 16 March and Wednesday, the rate stood at 3.169%, the highest since November last year.
Revealing the same trend, Wednesday, Portugal put at EUR 200 million market in Treasury bills to three months and 550 million 11 months. The interest rate for the first issue was 0.044% and the second 0.159%, when in previous emission values recorded were 0.007% and 0.015% respectively.
Despite the rise, the interest rates registered in Portugal are yet far from the maximum recorded when Portugal could not in practice have access to international markets, not being given signs of any lack of investor interest in buying national debt.
Are these relatively low rates to maintain? Or run the risk of facing a final break of the euro zone with Greece, contagion arrive in force to Portugal?
The Portuguese Government is optimistic. Pedro Passos Coelho and Maria Luís Albuquerque argued Tuesday that the fact that Portugal have their financing needs guaranteed for this year gives a safety margin to the country that protects other negative factors that may arise. “We are able to be able to say that the Portuguese Treasury is by the end of the year, in a position to face any volatility in the foreign market and we have good reason to believe that the coming months will, of course, a good answer also to the first half of 2016, “said the Prime Minister, ensuring that” if something more serious happen with Greece, Portugal does not fall below “.
But what appears to allow interest on the climbs debt of euro peripheral countries are relatively small at this moment is the conviction that the contagion effects from Greece will be this time quite controlled. On the one hand, the European financial system is much less exposed to Greece than in 2010 and 2012, on the other, Europe now has institutions capable of responding quickly and finally, the ECB is in the midst of a bond purchase program which helps to maintain low interest rates.
The problem, warn more pessimistic, may be what a Greek exit could mean for the future stability of the euro zone. That is if Greece leave the euro, the project of monetary union leaves in practice to have a irrevocability. And so if a country like Portugal face a new crisis, markets may start betting on a euro exit scenario, helping to fulfill their own prophecy.
No comments:
Post a Comment