Key Greece vote boosts euro against dollar

AP News
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Posted: Jun 29, 2011 3:51 PM
Key Greece vote boosts euro against dollar

The euro rose against the dollar Wednesday after the Greek parliament passed a crucial package of spending cuts and tax increases. Passing the cuts paves the way for loans that are needed to help the troubled country avert a default on its debts.

The euro rose to $1.4428 late Wednesday from $1.4364 Tuesday. The dollar was also weaker against the pound, the yen and the Canadian dollar.

Analysts predicted the country would have defaulted as early as next month without any help. European banks that hold Greek bonds would have been at heavy risk and the ensuing rise in borrowing costs across Europe would have sent economic ripples throughout the continent.

The bill to cut spending and raise taxes by euro28 billion ($40 billion) over five years, and raise euro50 billion ($71 billion) in privatizations over the same period of time, has provoked widespread outrage, coming after a year of deep cuts that have seen public sector salaries and pensions cut and unemployment rise to above 16 percent.

And Greece is not yet all clear. Another vote on Thursday will determine how the country implements the cuts and tax increases, which are very unpopular with Greek citizens.

The European Union and International Monetary Fund have demanded both bills pass before they approve the release of a euro12 billion loan installment from last year's euro110 billion ($157 billion) rescue package.

EU and IMF officials are also meeting July 3 to talk about an extended aid package for Greece beyond the original aid deal. Officials must negotiate to what extent private-sector creditors are involved in the second bailout.

In other trading Wednesday, the British pound rose to $1.6058 from $1.5989 late Tuesday. The dollar fell to 80.91 Japanese yen from 81.10 yen and fell to 97.07 Canadian cents from 98.25 Canadian cents.

The dollar also fell against most other currencies around the world, including those in Australia, Norway, Hong Kong and Latin America.