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The euro has risen against the dollar after the Greek government
unveiled a new series of austerity measures.
The euro rose 0.3% to $1.3637 but was slightly lower against the pound
at 90.60 pence.
On Tuesday, the currency fell to its lowest level against the dollar
for 10 months amid continuing concerns over Greece’s debt crisis.
Persistent worries over Greece’s 300bn euro ($419bn; £259bn) debt has
weighed on the European single currency.
The pound fell against the dollar, trading at $1.505.
The Greek government approved 4.8bn euros of austerity measures, hoping
to convince financial markets that it can pay off its debts and
persuade European leaders it is doing enough.
Greece has pledged to reduce its deficit from 12.7% – more than four
times eurozone rules – to 8.7% during 2010.
The measures announced on Wednesday include raising VAT to 21% from the
current rate of 19%, and cutting civil servant bonus payments during
holidays by 30% – which has annoyed union leaders.
But the austerity measures proposed so far – such as freezing public
sector pay, raising taxes and changing the pension system – have
already provoked huge street protests.
“The fiscal measures announced by Greece today should allow the
government to ease the short-term pressure on its finances with a bond
issue and may lead to firmer support from other countries,” said Ben
May, European economist at Capital Economics.
Greece needs to sell bonds in the coming weeks. It has to raise 20bn
euros in order to pay off maturing debt in April and May.
Greece’s Prime Minister George Papandreou is due to visit German
Chancellor Angela Merkel in Berlin on Friday, in what could be a key
meeting to decide what, if any, European assistance Greece receives.
He will visit France to meet President Nicolas Sarkozy soon afterwards.