Euro Remains Steady Despite Strauss-Kahn

Euro Remains Steady Despite Strauss-Kahn

by Rebecca Hall on 20 May, 2011

The shock arrest of Dominique Strauss-Kahn, the head of the IMF, in the middle of Eurozone debt crisis talks would reasonably have been expected to cause disruption in the European markets, particularly the Forex.

Thankfully, this has not so far been the case. The Euro initially fell against the dollar during Asian trading hours, but this was attributed to falling share prices rather than as a response to the Strauss-Kahn arrest. By European trading the following day it had returned to 1.41EUR against the dollar.

Although Strauss-Kahn is a highly influential figure, and was due to meet both Sarkozy and Merkel in the days following his arrest, the markets have shown little sign of moving for one man.

This is perhaps a recognition that he may be important, but there are larger structures at work here, and it is good to see confidence in the remaining players (of which there are many) in the Eurozone crisis talks, not least the 17 separate finance ministers. One would hope that so much economic knowledge in one place would be enough to calm investors; libertine French socialists or no.

There are reports that the IMF will be sidelined in the talks due to the absence of their chief executive. Arguably there is no reason this should be so, as any good chief executive surrounds himself with a highly capable team – if no one else can take his place at the talks the IMF really is in trouble. Considering his predicted bid for the French presidency, this is highly unlikely and it could be this thought that is keeping the markets (relatively) stable for now.

Decisions on who will replace Strauss-Kahn, and indeed, if he is definitely to step down, will be absolutely crucial for Forex investors in the coming days and weeks, but for now there is little to worry about and observers remain optimistic for the ongoing debt crisis talks.

In the mean time, investors would be advised to keep a sharp eye on the decisions made regarding both Greece and Portugal, and keep a watchful ear out for moves at and surrounding the IMF.

About the Author

Rebecca Hall

Rebecca Hall worked as an independent mortgage adviser for 10 years before turning to financial journalism full time. She has strong links to the CAB advising families on mortgage refinancing.