Ireland became the second eurozone nation after Greece to secure emergency funding from the EU and IMF, with comments following the announcement suggesting the amount will fall short of €100 billion. The news eased concerns of contagion spreading to other peripheral member nations, and as a result the euro immediately benefited and rose to two-week highs against the US dollar. The greenback, along with other safe haven currencies such as the Japanese yen and Swiss franc, suffered losses as confidence returned to currency markets. Sterling is not managing to keep pace with its rivals over ongoing UK economic concerns, and the resurgent euro is significantly weighing on the pound.

Sterling

Sterling has fallen by over one per cent against the euro since last Friday, following confirmation that Ireland has agreed to a bailout, which helped ease pressure on the single currency. Lingering concerns over the health of the UK economy and its banks’ exposure to the Irish economy are also weighing on the pound. As a result, sterling is also suffering at the hands of more yield attractive currencies, as sentiment turns positive from eurozone developments.

US dollar

The US dollar has fallen sharply across the board, particularly against the euro after Ireland agreed to accept secure emergency funding. However, a large degree of the greenback’s negative tone is linked to comments from Ben Bernanke, chairman of the US Federal Reserve, as he continues to defend the Fed’s decision to pump a further $600 billion into the US economy. Mr Bernanke is being accused of weakening the US dollar and significantly raising future inflation risks.

Euro

The euro rose across the board at the end of last week after Ireland agreed to a rescue package following days of negotiations with officials from the EU, ECB and the International Monetary Fund. The aid will help shore up a crumbling Irish banking sector and significantly reduce risks of contagion spreading to other peripheral nations such as Portugal. The eurozone sovereign debt problem is far from over; however the news will help confidence return to markets which has already helped the euro in reaching two-week highs against the US dollar.

Japanese yen

The yen remains under pressure from both home and abroad and starts the week trading at two-week lows against the euro and within sight of six-week lows against the US dollar.

Travelex Global Business Payments Malta, freephone: 800 733 22, www.travelex.com/mt/

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