Okay, mixed references here.
THE euphoria surrounding the Cyprus bail-out fizzled out in late trade on Monday, causing the rand to give back most of its earlier gains, with a softer euro also weighing on the local currency.
“We had a pretty range-bound day with the rand trading roughly between the R9.22-R9.30 level to the dollar for most of it. A lot of the euphoria on a bail-out plan for Cyprus led to risk-on sentiment, which initially benefited the rand, but this euphoria has waned and the rand went with it,” a local trader said.
No decision has yet been taken on whether commercial banks in Cyprus will open as scheduled on Tuesday after a 10-day lockdown imposed on fears of a run on deposits, the Central Bank said.
Contacted by AFP, a Central Bank official said there had been “no decision yet” on whether banks would reopen, following a bailout agreement for the debt-hit island reached with the eurozone earlier Monday.
U.S. stocks declined Monday, erasing gains that briefly put the S&P 500 Index less than 1 point from its record high, as investors considered the deal to keep Cyprus in the euro.
“We were having too much of a celebration over the near-term success of fixing the Cyprus problem, but the devil is in the details, and the details are still coming out,” said Art Hogan, market strategist at Lazard Capital Markets.
“The good news is disaster has been avoided; the bad news is the knock-on effect,” Hogan added.
The Bear must not be happy:
Russia was cut to marketweight at Bank of America Merrill Lynch, which called the nation a “net loser” from the Cyprus bailout plan.
“While the rest of the world welcomes the Cypriot bailout, the major haircuts and freezing of deposits over 100,000 euros is clearly worse for Russia than the originally proposed Cypriot bailout,” Bank of America strategists said in an e-mailed note today.
I doubt it’s over:
In the Europe vs Russia poker game, the Europeans have played the most aggressive move they can, essentially forcing Russian depositors to contribute maximally to the bailout against their will. If this is how the game ends, it’s an unambiguous loss for Russia, and a win for the EU.
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