BUSINESS

Greek exit would mean a euro rise, says Dexia

The euro may rise more than 3 percent to a five-month high against the dollar should Greece leave the currency union, according to RBC Dexia Investor Services Ltd.

The 17-nation currency has advanced 1.4 percent against the greenback this year even as the euro region slides into recession and reports suggest global growth is faltering.

While the European Central Bank left its benchmark interest rate at a record low 1 percent on Friday, it is still above the Federal Reserve?s target rate of between zero and 0.25 percent and the Bank of England?s benchmark of 0.5 percent.

?I don?t think the interest rate differential alone is enough to keep the euro where it is,? Morgan McDonnell, head of global foreign exchange, cash and credit markets at RBC Dexia in London, said in an interview this week. ?It is a bet on Europe and its future without the weaker countries. The second they say Greece is out, it is going to go up to $1.36.? [Bloomberg]

Online