Private Sector Participation in the Greek Bailout Revisited

Back in July, Greece expected that about 21% of private bondholders would accept write-downs in order to prevent an outright default its sovereign debt. Now, some eurozone countries, led by Germany, are hoping for a little more from the private sector.

A decision on Greek aid is being pushed to October 13 as eurozone countries mull over the options, and try to figure out how to get the private sector more involved in the bailout. Interestingly, none of this news is negatively impacting the euro on the FX market. Even though the agreement with private bondholders was already sealed, and revisiting could cause bond market upheaval, there has yet to be a really negative change. Euro continues higher, even though the US dollar is gaining against most other major currencies.

There is a chance, though, that today could simple be a break. Forex traders may be waiting on developments. At 19:26 GMT, EUR/USD is at 1.3280, up from the open at 1.3176. EUR/GBP is higher at 0.8625, an increase over the open at 0.8538. EUR/JPY is also higher, at 102.07, up from 100.95.

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