Even as Greek officials touted a two-year extension to a bailout package, investors worried last week that the heavily indebted southern European nation may end up having to leave the eurozone’s common currency, which would dent the euro’s value relative to the dollar.
The euro’s movement, as well as a weakening of the Mexican peso and generally steady values of Asian currencies, is included in IndexUniverse’s weekly Currency Impact Report. The weekly feature is based on data that come to us from MSCI.
The talking points in this week’s data are as follows:
- The euro faced another down week, as there was still concern as to whether Greece will stay in the eurozone despite the fact that Greek finance minister Yannis Stournaras told lawmakers that Greece had secured a two-year extension to 2016 for its bailout program. U.S. investors lagged behind their European counterparts in Europe by an average of 70 to 100 basis points. Even Citigroup Chief Economist Willem Buiter shared his doubts with Bloomberg News, saying, "I myself continue to be unconvinced that the funding, the non-market funding, necessary to keep Greece on board will be available."
- The Mexican peso saw a slight correction this past week after rallying 11 percent against the U.S. dollar since June. U.S. investors in Mexico lagged their local counterparts by 1.10 percentage points over the past week. However, U.S. investors have seen returns of 23.42% vs. 18.74% for local Mexican investors—all due to the peso’s rally. This past week, Mexico’s central bank held the benchmark interest rate at a record low of 4.5 percent after inflation began to ease.
- Asian currencies were pretty muted in the past week, with little to no movement coming from the Japanese yen. Investors are looking ahead to see how elections in the U.S. pan out.