Greek crisis drive the euro to one-year low

The euro fell to a one-year low against the US dollar earlier yesterday, over fears that the bailout package proposed for the ailing Greek economy would not prevent financial troubles elsewhere in Europe.

The currency reached $1.3088 against the dollar – a level not seen since April of last year – although it recovered slightly to end the day at $1.3094.

However, that was still lower than the $1.3212 it traded for on Monday. Euro also lost 1.6% against the yen, to a trading level of Y122.81, and 0.3% on the pound, going down to £0.8632.

The euro is losing strength as the Eurozone is struggling to prevent the Greek economy from defaulting on debts; a rescue loan package worth 110 billion euros (US$145.62 billion) is currently underway to help ease the crisis. Michael Hewson, who is a currency analyst for CMC Markets, commented that the euro probably will “continue to remain under pressure over the coming days.”

Protestors in Greece, rallying against austerity measures, have clashed with police in the capital of Athens. Some people participating in the rally – attended by thousands of teachers and students – threw stones at riot police, who responded by employing pepper spray, although the BBC described the protests as being generally peaceful.

Demonstrators say that a recent austerity proposal – which is to include pension cuts and an increase in taxes – will adversely affect the education sector. Teachers, along with hospital workers and public servants, have started a two-day strike over the measures. Also present were 150 members of the armed forces, who protested having their bonuses lowered.

The austerity plan comes shortly after the Greek government said it would introduce spending cuts to obtain a loan package by the EU and International Monetary Fund, aimed at helping Greece recover from a financial crisis.

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