A good few analysts have attributed the month long fall of the Euro against the other major currencies to worries about the debt burden in Greece and nervousness about similar (but less marked) problems in Spain and Portugal. The fall will have given a boost to European exports, at least in the short term.
The Euro has come off a high of around 133.6 against the Yen in early January, to trade down as low as 122.07; a fall of almost 9%. This will not have pleased the Japanese because a strong Yen hurts their own exports which are vital to the Japanese economy. You will recall that the Japanese Finance Minister wanted to see the US Dollar worth 95 Yen (it is currently at 89.68).
European Union leaders are due to meet on Thursday and the debt problem and its ramifications are firmly on the agenda. European Central Bank President, Jean-Claude Trichet, will also attend the meeting.
Ordinarily, Trichet would not be an automatic attendee at such a gathering and he is flying in from Australia to be present. This has led to speculation amongst tea-leaf readers that the ECB is looking to work closely with the EU on resolving the Greek debt problem and, presumably, warding off similar fears over Spanish and Portuguese debt problems.
The Greek government has stated its intention to pare back the nation’s deficit from 12.7 to 2.8% over the next three years. Many analysts have doubted that the Greeks can pull this off, but with support from the EU and possibly the ECB, it was enough to see a rally in the single currency which closed up 0.5% against Sterling and 0.3% higher against the US Dollar.