Experts feel euro may suffer in long term

The Council of the European Union officially agreed on the bridge-financing loans for Greece in the shape of an EFSM loan on Friday. Greece will receive €7.16 bn. for three months will allow it to service the debt it has to repay to the ECB today as well as arrears versus the IMF and the Greek central bank. 

However, the EFSF liquidity is only likely to last until 20th August when the next bonds held by the ECB fall due, says Commerzbank. Until then the ESM bailout package has to be up and running. There is reason to assume that the parties involved will once again rely on last minute negotiations. For the time being the risk factor "Greece" has been banished from the EUR exchange rates, but it has not vanished permanently. 

According to Commerzbank, "Significantly negative risk reversals in long-term EUR options still make good sense. The fact that they shrank to such an extent in the recent past is indicating excessive optimism. The European currency has not become more secure medium to long term as a result of the Greek bailout - on the contrary."