FX Binaries and the Portuguese Debt Crisis Wednesday, 04 May 2011 03:00

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Today saw the Euro pushed into the forex limelight as key economic events including the latest Sterling budget proposal were overshadowed by the affirmation that European debt has continued to spread. Although bullish sentiment was leaning towards burying the past ghosts of Euro Zone debt contagion it seems that market doubt has once again been exposed as Portugal became the next in a long line of countries to sit under the label of ‘debt crisis’.

Portugal certainly succeeded in creating a long and enduring battle to avoid the euro-zone debt crisis but the Portuguese Prime Minister, Jose Socrates has officially succumbed as a result of the failed implementation of the government latest cost cutting geo political policies.

The timing of Jose Socrates departure, the eve of a crucial European Union summit, serves to cast an even bigger emphasis on Portugal’s decline.

Market analysts are inclined to look backwards at previous financial pathways in the form of Irish and Greek financial bailouts as a pre-requisite for market recovery. Market trust is likely to be dampened by the Portuguese caretaker government at the helm of over $12.53 billion of debt. The impending debt deadline of June 15^th is now looking less realistic with a market emphasis on haste and efficiency in order to restore fractured confidence.

As conjecture spreads, the likelihood of a Jose Socrates political promise that a 2% deficit reduction plan by 2013, rather like his speedy exit, has fallen out of market interest like a dead weight plummeting to the bottom of a pond. It still remains there but the potential of a resurface is hitting the barrier of dormancy.

The reason for the Prime Minister’s departure from office is blamed on political games but with analytical predictions of an 87.9% rise in Portuguese debt, the Portuguese financial situation is far from a game and well and truly immersed in the volatility of market realism.

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