Spain to find other way to prop up Bankia

Bank exchange rates are you being ripped off by your bank

The ability of the Spanish banking system to obtain some form of cheap funding was once again called into question as the European Central Bank has decided that the Rajoy government plans are non licet. Spain had hoped to directly take an equity stake in Bankia, the nation’s third largest lender, paying for it in Spanish government debt. Bankia could then take this debt and use it as collateral against loans from the ECB. It seems a rather back-door way of doing things and this is because the ECB is not allowed to directly finance sovereigns, hence the rejection of the plan.

How they haven’t been directly financing sovereigns via the SMP program (purchasing of Italian, Spanish, Greek and Portuguese debt) I don’t understand but, anyway, that plan is dead in the water.

The situation in Spain was compounded by the resignation of the central bank governor yesterday. He has been due to leave in 6 weeks’ time anyway so plans had already been made for a successor but the suddenness of the early departure shocked markets yesterday. At a time at which stability and consistency are at a premium, this undermined any that had been forthcoming. Chuck in a ratings downgrade on Spanish debt by the ratings agency Egan Jones and it was a rough day for Spanish assets all round.

EUR-USD hit fresh 22 month lows as a result, breaking through the 1.25 level finally with GBPUSD seemingly homing in on the March lows of 1.5603 as a result of the pressure to buy USD. GBPEUR was a dead cross yesterday, trading above 1.25 for the session but with little fanfare.

The single currency wasn’t helped by a slip in German inflation that will open the door further for those who believe a rate cut may be forthcoming from the ECB next week. We will wait for today’s money supply data from the Eurozone before making an appraisal of the prospects.

Today will likely be all about bond yields. Spain’s have continued to push higher as the crisis within both the sovereign and banking markets have increased dragging other peripheral bonds (Italy in particular) back into the danger zone. While Spain does not have a debt auction until June 7th, Italy will try and get away over EUR6bn of five and ten year debt this morning. Is the contagion once again lapping on the shores of Italy?

UK data comes in the form of M4 or broad money data with a contraction only going to add more fuel to the flames for those looking for further QE from the Bank of England.

Pressure remains on GBP versus the dollar today and we can foresee a move back into the 1.55s should EURUSD continue to slip lower.

Indicative Rates Sell Buy
GBPEUR 1.2496 1.2523
GBPUSD 1.5580 1.5604
EURUSD 1.2450 1.2472
GBPJPY 123.54 123.82
GBPAUD 1.5927 1.5952
GBPNZD 2.0503 2.0532
GBPCAD 1.5976 1.6004
NZDUSD 0.7588 0.7610
GBPZAR 13.02 13.07
USDZAR 8.3472 8.3891
GBPPLN 5.4524 5.4789
EURJPY 98.73 99.00

Please note these rates are “interbank” rates ie they indicate where the market is currently trading and are not indicative of the rates offered by Rates are dependent on amount transacted. It is important to remember that foreign exchange rates fluctuate all the time. The rate you will receive will depend on the amount and currency you require.

Company Details

Spain to find other way to prop up Bankia

Get a quick quote

Open Account with Currencies Direct

Currencies Direct are located at:
51 Moorgate,, Greater London,, , EC2 R6BH, United Kingdom

Get a Quick Quote

Newsletter Signup to CMT

Sign up to our foreign exchange newsletter to receive news updates directly by email

Compare Money Transfer will not Share your details!

Bank Exchange Rates Comparison

High St Bank Exchange Rate

All Rights Reserved: Copyright 2006 - 2018 Compare Money Transfer Limited offering FCA Regulated Suppliers - 34 New House, 67-68 Hatton Garden, London, EC1N 8JY. +44 (0) 843 357 4882