Euro haven.

Kathimerini English - - Front Page -

Euro­pean mar­kets, an­a­lysts said. Turnover, how­ever, was 9.21 per­cent lower yesterday, reach­ing 33.91 mil­lion eu­ros. Af­ter suf­fer­ing in re­cent weeks, bank shares all sky­rock­eted yesterday. Banks Pi­raeus and Al­pha were up 29.17 per­cent, fol­lowed by Eurobank on 26.47 per­cent and Na­tional on 25.42 per­cent. The FTSE/Large Cap In­dex con­stituents posted gains of up to 29 per­cent.

The no­tion that the euro could be a haven in times of tur­moil seemed pre­pos­ter­ous just a few weeks ago. Yet that’s ex­actly what it’s be­come as the world gets rocked by ev­ery­thing from de­val­u­a­tions to bear mar­kets in stocks. The euro has surged al­most 4 per­cent against a bas­ket of de­vel­oped-na­tions peers in the past month, the big­gest gain in the group. It’s up against more of the world’s ma­jor cur­ren­cies than the dol­lar, yen, Swiss franc or pound. And it’s climb- ing even as the Euro­pean Cen­tral Bank ex­pands the sup­ply of eu­ros. While the rally sig­nals con­fi­dence in the 19-na­tion cur­rency union fol­low­ing the Greek cri­sis, it also com­pli­cates the ECB’s ef­forts to jump-start the econ­omy. That’s be­cause a stronger ex­change rate has the po­ten­tial to curb ex­ports and slow in­fla­tion. “Safe­haven flows have been mainly tar­geted at the euro, which I think is stun­ning,” said Thu Lan Nguyen, a strate­gist in Frank­furt at Com­merzbank AG. “The ECB won’t just stand aside and may start to try to ver­bally weaken the cur­rency. That’s their prime in­stru­ment for de­liv­er­ing in­fla­tion.” China’s shock de­val­u­a­tion this month sparked a rout in emerg­ing mar­kets that has prompted in­vestors to un­wind carry trades funded in eu­ros. These deals in­volved bor­row­ing at the ECB’s near-zero in­ter­est rates to fund higher-yield­ing pur­chases, and can­cel­ing them means buy­ing eu­ros back.

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