Greece

For months “Grexit” has been a regular topic for speculation among foreign currency specialists. But the working assumption has been that all parties in Greece’s drawn-out saga would find a way of resolving their differences and keep the country in the eurozone. That is no longer the case following the resounding “No” vote in the Greek referendum. As the financial markets digested the referendum outcome, foreign exchange strategists began to factor in the increased probability, instead of mere possibility, of Grexit.

Greece’s leftwing government was set for a decisive victory in Sunday’s referendum as voters backed its call to reject a compromise with international creditors, raising serious doubts about the country’s ability to remain inside the eurozone, the Financial Times reported. With 70 per cent of votes counted, the No camp had won 61.5 per cent and was leading in every region of the country. If confirmed, it will prove a remarkable political exploit by Greek prime minister Alexis Tsipras.

Greece’s prime minister accused Europe’s leaders of attempting to “blackmail” Greek voters, just hours after apparently holding out an olive branch to the country’s creditors by accepting most of the terms of the economic reform plan they had tabled last weekend. Eurozone officials said they were baffled by the mixed messages coming from Greece, which this week missed a €1.5bn payment to the International Monetary Fund and has been forced to impose capital controls to avert a financial meltdown.

The freezing of Greece’s banking system is the most dramatic moment of the country’s five-year debt crisis—and perhaps its most pivotal. Since Monday, Greeks can get only €60 a day at cash machines and can’t transfer money abroad, The Wall Street Journal reported. How long the remaining cash lasts and how unsettled Greeks become will be big factors in Sunday’s referendum on creditors’ demands for more austerity in exchange for more bailout funds. The tighter the squeeze, the more Greeks might vote “yes” to reconcile with creditors, analysts say.

Greece on Tuesday added its name to a roster that includes some of the world’s poorest and worst governed nations, including Iraq, Sudan, Somalia and Zimbabwe, the International New York Times DealBook blog reported. Those are a few of the countries that have missed payments to the International Monetary Fund — as Greece did Tuesday, when it failed to make a loan payment of about 1.5 billion euros, or $1.7 billion, to the fund. The International Monetary Fund does not use the term default. It instead places countries that miss their payments in so-called arrears.

Uncertain what might happen next, with banks and financial markets closed, across Athens people wasted little time Monday, rushing to the nearest A.T.M. to withdraw their new daily maximum of 60 euros, determined to raise every last cent while they could, the International New York Times reported. Yet, even as Greeks faced a new level of chaos and hardship this week, they were being confronted with another unsolvable riddle: a vote on their future that was even more uncertain than the current chaos. “Simply put, we’re confused,” Eleni Gardikioti, 31, an insurance worker, said.

Greece will keep its banks closed on Monday in a bid to prevent its banking system from collapsing, a bank official said, after the European Central Bank moved to cap the amount of emergency loans it provides for the country’s cash-strapped lenders, The Wall Street Journal reported. The ECB said earlier on Sunday that it wouldn’t increase the lifeline of emergency liquidity that has been sustaining Greece’s banks, even as nervous Greek depositors appeared to withdraw their money at a greater pace over the weekend.

European Central Bank policy setters are considering keeping Emergency Liquidity Assistance open to Greek banks on Monday but imposing a higher valuation discount on the security they offer in return for the funding, people familiar with the matter said, Reuters reported. If the haircut on the assets Greek banks give for Emergency Liquidity Assistance is increased, it would, however, curb their use of such finance.

European finance chiefs pushed off talks to seal a Greek bailout deal until the weekend after ending another meeting without agreement, leaving only days to keep Athens from defaulting on a loan payment early next week, The Wall Street Journal reported. The ministers from Greece and the other 18 eurozone countries cut short a crisis meeting in Brussels on Thursday to give negotiators from the Greek government and its creditors more time to bridge differences on budget cuts and other terms necessary to unlock more aid for Athens. Time is running out to resolve the standoff.

International creditors demanded politically sensitive changes to Greek prime minister Alexis Tsipras’ tax and reform proposals on Wednesday, adding fresh uncertainty to talks aimed at unlocking aid to avert a debt default next week, the Irish Times reported. Mr Tsipras spent all afternoon in a meeting with the heads of the European Commission, the International Monetary Fund, the European Central Bank and euro zone finance ministers, but officials said there was no breakthrough.