EURO WELCOMES GREEK DEBT FACILITY MOVE - The value of the euro has jumped sharply against the dollar and the pound this morning after the euro zone agreed details of a multi-billion euro loan package to Greece. The single currency rose by more than two cents against the dollar, to $1.3672. Against the pound, it rose by almost a penny to 88.40 pence sterling. Euro zone members have committed to providing up to €30 billion in loans to Greece over the next year to help stave off a debt crisis. Ireland could contribute about €450m towards the funds.
Simon Barry, economist at Ulster Bank, says the euro's relief rally against the dollar is set to continue in the short term. He says that one of the reasons for the euro's problems recently has been Greece's debt problems and the uncertainty of the policy response to that debt. He says the events over the weekend provide some additional clarity on the form of the aid package, the size of it and the terms of how it is going to be dispersed. The economist says the markets really forced the hands of authorities in Europe to 'come clean' and to reveal the details of what they were intending to do.
Mr Barry says the interest rate on the loan package is lower than the Greeks can currently access on the markets, but it is still higher than what would be charged to other euro zone members. He says that Ireland could borrow at a lower rate, and then charge the Greeks a higher rate of interest for the money. It remains to be seen, however, whether the facility will be activated, he adds.
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CONSTRUCTION PMI AT TWO YEAR HIGH DESPITE CONTINUED CONTRACTION - Figures for March from the Ulster Bank Purchasing Managers Index show a further slowing in the pace of deterioration of business conditions in the Irish construction sector. But while activity in the sector is still falling sharply, March had the weakest fall since October 2007. Civil engineering activity saw the steepest decline, and it has been falling for 28 months in a row. Building jobs were cut further in the month, as firms reduced staffing levels to cut costs.
Simon Barry says the PMI rose to a two and a half year high last month. He says that while at a certain level that is good news, the index is still consistent with a construction sector that is continuing to contract. He also says that for the third month in a row companies are anticipating that the industry will stabilise in year's time.
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QUINN INSURANCE IN THE HIGH COURT TODAY - The Financial Regulator is applying in the High Court to have Quinn Insurance put into full administration today. The application comes despite discussions over the weekend about a plan to refinance the Quinn Group with €700m provided by Anglo Irish Bank. The bulk of this €700m is a refinancing of group debt. The regulator has been preparing a detailed case for the Court over concerns about serious and persistent breaches of solvency rules by the firm. And the Quinn Group, which owns the insurance company, is to either oppose the application today, or to try to get an adjournment, so as to have more time to agree another solution.
