Euro sits above two-week trough

The euro remained above a two-week trough on Friday after Spain announced a crisis budget which many viewed as heading in the direction of requesting a bailout.

The common currency appears likely to close the quarter out with a slight gain, although it is expected to remain pressurised in the quarter ahead, with the financial crisis in both Spain and Greece among some of the problems. The currency was a $1.2929, a small rise from levels seen in late US trading on Thursday having rebounded from a two-week trough of $1.2828 the same day.

Bank of Tokyo-Mitsubishi UFJ currency analyst Minori Uchida said that he expects the single currency to decline gradually. He pointed out that there’s a risk of Spain’s credit being downgraded, the Greek talks with the troika may not result in anything and the region’s economy will remain fragile.

The euro has risen by 2.1 per cent this quarter, mainly due to optimism that Spain’s borrowing costs would be reduced when the European Central Bank begins purchasing the country’s debt. However, the programme cannot get underway until Spain formally requests a bailout.