Three Factors To Watch in Greek Crisis

No one knows quite how markets will react to the extraordinary events in Greece over the weekend. The euro will be in the spotlight and was already sinking against other currencies in early Asia trading. Debt of other peripheral eurozone countries, like Portugal, Spain and Italy, could come under pressure, and assets in developing Europe will also be closely watched. Deutsche Bank say they analysts are focusing on three key factors.

- The European Central Bank’s next move: The ECB on Sunday put a cap on the emergency liquidity it has provided to prop up Greek banks as depositors yank money from their accounts. An outright suspension of the emergency liquidity later this week would heap pressure on Greek banks, Deutsche Bank’s analysts note.

- Greek politics: The wording of the question in next Sunday’s referendum could be key, the analysts said. Greece’s government has said it would be a vote on the austerity package being offered by the country’s creditors, rather than on membership of the common currency, which remains popular. Deutsche Bank notes “that the extent and direction to which the electorate apportions responsibility for recent developments [to the Greek government or the country’s creditors] remains an open question.”

- What will the creditors do? Greece will now likely default on a €1.54 billion ($1.72 billion) payment it owes the International Monetary Fund on Tuesday, and an international bailout deal expires the same day. But will Greece’s creditors pile the pressure on or remain at the negotiating table? Deutsche Bank says that “a last-minute attempt to salvage negotiations tomorrow cannot be ruled out,” though the chances of a breakthrough now look low. “In sum, a new chapter of uncertainty has opened up with the Greek crisis.”

Πηγή: wsj.com