“Although the situation is fluid, at this point Greek exit from the euro appears more likely than not”, Malcolm Barr, an economist at JPMorgan in London, said in a report to clients on Sunday, adding it could come “under chaotic circumstances”.
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This could be the first step for Greece out of the euro. Against the yen, the euro fell 0.5 percent to 135.45 yen. The yen gained 0.3 per cent to 122.38 per dollar.
While Greece accounts for less than 2 percent of the euro region’s output, an exit would set a precedent for other nations that membership is reversible. But Greece needs a lot more euros, which Europe may simply not send unless Greece were to change its policies dramatically.
The introduction of a new currency would mean exiting from the Eurozone, Schulz said. The euro touched a multi-month low of 1.09 against the dollar. Yet investors are bracing themselves for more turbulence ahead. One euro at that time was worth 340 drachmas.
“The referendum result will surely lead to another round of market weakness. Varoufakis’ departure tends to suggest softer negotiations”, said Richard Benson, Co-Head of portfolio investments with currency fund managers Millennium Global in London. “When we think about Greece, we do need to keep in mind that there are different paths to recovery”.
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That was similar to how the currency traded last Monday after the collapse of talks between euro zone leaders and Athens and reflected the uncertainty of many forex players about how much damage a Greek departure would actually do to the euro. The Bloomberg Dollar Spot Index, which tracks The USA currency against 10 of its major peers, gained 0.1 percent to 1,188.67. Swiss National Bank President Thomas Jordan said on June 29 the central bank intervened in markets as demand for francs soared after Greece announced plans to hold the referendum.
