The euro rebounded to 1.2960 from the well supported intraday low of 1.2885 in Europe on shortcovering and as the dollar and the yen declined modestly.
The saga on Cyprus continues and trading has been light with many market participants staying on the sideline, as the country struggles to find a solution to secure bailout funds from the European Union prior to the deadline on Tuesday March 26, or face the collapse of its financial and banking systems.
The euro initially fell sharply from 1.2925 to 1.2888 at the European open when Cyprus’s finance minister Michael Sarris left Moscow empty-handed after Russia turned down its appeals for financial aid which left Cyprus more isolated. The deadline is looming to find the 5.8 billions euros in additional funding demanded by the EU to complement 10 billion euros needed to preserve the banking system and promised by the EU.
After two days of crisis talks with Cyprus, Russian Finance Minister Anton Siluanov told reporters, “The negotiation talks have ended as far as Russia is concerned.”
Angela Merkel said, “I still believe we will get settlement, but Cyprus is playing with fire.” Cyprus lawmakers are currently rushing over a resolution on measures proposed to raise the required collateral prior to the deadline on Tuesday, March 26.
In Germany, the IFO business climate fell lower-than-expected to 106.7 this month from 107.4 in Februrary. The median forecast called for an increase to 107.8.