The Euro continues to hold close to a 3-month low against its main rival, the U.S. Dollar, as investors fail to derive any comfort from further details of the Cyprus bailout plan. The Eurozone’s finance ministers have decided that as part of the repayment terms Cypriot bank accounts would henceforth be taxed, and that has exacerbated investors’ concerns of a Eurozone-wide collapse of financial institutions which might similarly find they are forced to tax their bank depositors for bailout loan reparations. Thus far there were no signs of any Eurozone area bank runs but investors remain wary of the possibility.
The promise of a concession that would keep smaller savers from having to bear the tax gave the Euro a chance to recoup some of Monday’s losses. However, the Cypriot parliament still needs to vote on the proposed changes to the bailout terms and without their endorsement a default is possible; the vote is to take place later today.
As reported at 11:08 a.m. (JST) in Tokyo, the EUR/USD pair was trading at $1.2945, coming off Monday’s 3-month trough of $1.2882. The EUR/GBP pair was trading at 85.75 Pence, close to the pair’s 5-week low, while the EUR/JPY pair traded at 123.47 Yen, edging away from yesterday’s low price of 121.585 Yen.