On Sunday, European countries promised to make eighty billion euros in loans available over the next three years. The International Monetary Fund promised thirty billion.
The quality of Greek government debt is now rated at "junk" levels. The high risk has investors demanding higher interest rates, and not only on Greek debt.
Portugal and Spain have also had their credit ratings reduced. Both borrowed from credit markets in the last few days. And both had to pay far higher rates than Germany, the safest investment in the euro area.
The euro is eleven years old and used as the currency of sixteen countries. But less trust in the euro has reduced its value to the lowest levels in over a year.
Sebastien Galy says growth expectations for the euro area have dropped. This has affected producers of raw materials such as Australia, Brazil and Canada.
But he says the falling euro should help ease the crisis. He expects the exchange rate against the dollar to reach one-to-one within a year. That would be good news for European countries with heavy debt loads.
SEBASTIEN GALY: "The lower the euro is, the more competitive these economies become and, therefore, the more the fiscal concerns are going to be reduced."
While the euro has fallen, the dollar has gained value. Investors fleeing risk have bought dollars and American debt.
And that’s the VOA Special English Economics Report, written by Mario Ritter. I’m Jim Tedder.
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2013-11-25
2013-11-25
2013-11-25
2013-11-25
2013-11-25
2013-11-25