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The euro fell against the dollar on Monday as investors anxiously awaited emergency talks on Greece in Brussels, where creditors want 11th-hour concessions to haul Athens back from the brink of bankruptcy.
The euro, which has surprised many by its resilience in the face of growing worries that Greece could default on its debt and be forced out of the currency bloc, had earlier risen to as high as $1.1404 after the European Union welcomed new proposals from Athens.
New proposals
EU chief executive Jean-Claude Juncker’s chief-of-staff had tweeted that the proposals represented a “good basis for progress’’ at the talks.
But the single currency quickly erased its earlier gains in European trading and was down 0.2 per cent by 0800 GMT at $1.13255.
“There’s a little bit of a fear factor here; there’s a lot of uncertainty,’’ said Richard Wiltshire, an FX dealer at ETX Capital in London.
“The fact that this is going to drag on means that you’re probably going to get these sorts of moves as people wonder ‘are they or aren’t they’, until we get some sort of resolution.’’
Emergency summit
Greek Prime Minister Alexis Tsipras will meet Juncker, ECB President Mario Draghi, IMF head Christine Lagarde and euro zone finance ministers chairman Jeroen Dijsselbloem at 0900 GMT. Euro zone finance ministers are due to meet 90 minutes later and a summit of prime ministers and presidents is due at 1700 GMT.
“It sounds like Greece has a proposal that Greece will be taking to the euro area summit today,’’ said Hamish Pepper, a currency strategist at Barclays in London. “The important thing will be whether we actually see a positive response from the eurozone leaders when they meet this evening.’’
Boosted by its gains against the euro, the dollar climbed 0.2 per cent against a basket of currencies to 94.304.
Against the yen, the common currency climbed 0.1 per cent to 139.42. The dollar was also up 0.4 per cent against the Japanese currency at 123.13.
Many investors remained cautious because it was not immediately clear how far the new proposals yielded to creditors’ demands for additional spending cuts and tax hikes, nor whether creditors can stomach the offer.
And speculation is rife that, if no deal were reached on Monday, Greece may need to impose capital controls on Tuesday to avert a banking crisis as savers keep withdrawing funds.
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