Greece’s Possible Dropping from Eurozone to Affect Dollars

With political and economic problems happening in Greece, and a possibility that the country may consider withdrawing from the Eurozone, analysts are saying that its impact may cause the Australian dollar to fall at US90¢ or below. 

Over the weekend, members of the G8 discussed what it could do to help lessen the effects. 

On Friday, the dollar actually was at its lowest in the last six months, with US98.24¢. This was also because of the result of a downgrade by Moody’s of some sixteen Spanish banks, and the reduction of Greece’s credit rating by Fitch Ratings for fears based on the recent political happenings. The country is set to have an election on June 17. 

The S&P/ASX200 also suffered one of its worst returns last week, at 5.6 per cent in value, which is considered as the lowest since September, and its biggest lost in just one day since November. 

Banks in Australia have also warned they will take more care and caution about extending funds for fear of a meltdown, especially with Europe’s market. 

In recent weeks, financial analysts have seen the trend in Greece and that its decision to formally leave Eurozone is almost sure. The move could trigger other debt-ridden countries, like Portugal, Ireland, Spain and Italy, to follow and could initiate events that will affect the world’s economy greatly. A bank strategist predicted that the dollar could fall to even lower rates at US70¢, if this were to happen. But if Greece was the only country to leave the union, the dollar can recover at US105¢. 

Another analyst says that even if Greece comprises just three percent of the Euro, its move can be considered a precedent, or a contagion that poses bigger problems.