This morning the European Central Bank (ECB) raised concerns that the newly passed Irish austerity budget did not guarantee Irish assets as security against the Irish bailout. In the rush to secure funds for the Irish Government the ECB-IMF signed an agreement that does entirely secure Irish banking assets as collateral for the loan.
In short the ECB has questioned the legal basis of the bailout.
Following this announcement the euro fell against the dollar to a two month low. In addition bond spreads on Irish Government bonds widened to 8.65% as the markets sought alternative investments. German Government bond spreads by comparison tightened to 3%.
by Peter Lavelle with foreign currency exchange specialist Pure FX.
