Forex Flash: Cypriot Parliament to approve bailout fearing the ECB – TD Securities

FXstreet.com (Barcelona) - After much discussion over the Cyprus bailout, negotiations concluded last night to reduce the impact of the levy on smaller savers and “the Cypriot parliament is due to vote on the bailout conditions today, although there is a risk that this is pushed back to tomorrow”.

“We would expect parliament to vote in favor of the bailout as the ECB is clear that it will withdraw support for Cypriot banks if a bailout is not agreed—which would certainly lead to a larger banking sector collapse and leave the Cypriot government unable to cover deposit insurance payments”, wrote analyst Annette Beacher, pointing to potential for further delays but. Also, “with the exception of financial stocks, European bond and equity markets have reacted far less to the Cyprus news than to either the avoidance of falling over the US fiscal cliff or to the Italian election result”, she continued, adding that because of this “unique” case, next time there is a flare up of European sovereign risk in the future, “market moves could be more accelerated as depositors move sooner in order to salvage their savings”.