Greece is the major headline shaping the financial market since May. This is because of her debt to IMF. The country is in a dilemma of whether to strike a deal or not on her debt to IMF of about £1.1bn. The IMF has provided Greece with some terms and condition to meet before a deal could be reach. This terms and conditions are unfortunately too harsh on the people of Greece. This is why there is a prolonged delay on whether to strike the deal or not. The IMF wants Greece to cut down pensions and increase retirement age, increase VAT, privatise the power firm etc.
Over the weekend, the meeting between the Greek officials and IMF ended in a deadlock. The prime Minister called for referendum on its creditors’ requests. In the early hours, the prime minister released a decree to on capital control. He said all banks will be shut till after the referendum on 5th of July. Cash withdrawal limit was also reduced to £40. International fund transfers from Greece are also not allowed but wages and pensions will continue as normal.
Greece has appealed to European central bank to extend her bailout till after the referendum. The ECB has curbed all its assistance to Greece on the fear of a possible default.
The situation In Greece had a massive impact on the market during the Asian open. Nikkei dropped by 3%. FTSE100 dropped more than 100 points. Euro traded at 1.09.
The uncertainty in the market continues, as it as seems Greece will default on the payment in about 24 hours. Greece will be the first developed country to ever default an IMF payment. Traders and investors are patiently waiting to see where to put their money. Swiss might be the big beneficiary of this big uncertainty ahead.