Euro
During Asian trading hours, euro edged slightly but remained around the 4-month lows as banks in Cyprus reopened on Thursday amid massive and draconian security arrangements. The banks had been shut for almost two weeks as the government had feared a massive outflow of funds from Cyprus. For instance, Russians started withdrawing funds as soon as rumours of the tax levy started circulating.
Investors remained equally cautions ahead of Italy’s center-left candidate Pier Luigi Bersani’s unenviable task of forming a government in a country which is deeply divided after Beppe Grillo’s Five Star Movement had rejected Bersani’s pitches.
Gold
The precious yellow metal stayed above $1600 on Thursday as investors were fearful that the bailout deal struck between Cyprus and The Troika would become the blueprint for future bailouts. Concerns over the direction of the euro have pushed gold prices up, as the commodity known to be a safe haven asset, is becoming increasingly desirable for anxious traders. Even though the story of the tiny island nation of Cyprus will no longer dominate headlines in the coming weeks, the complicated and dramatic episode in the single currency’s history will likely leave a mark and cause some long term damage to the euro.