Chaotic Cyprus Threatens Euro

Learn Forex News : The euro fell to its lowest level in more than three-month high versus the U.S. dollar over the course of parliamentary voting on Cyprus related to the implementation of tax on bank deposits, prompting investor concerns about the euro zone instability.

A Cyprus government spokesman said that the discourse of the taxation of bank deposits, which are needed to secure the disbursement of the bailout, will not be approved by parliament. The rejection of these requirements will be increasingly closer to the island nation to default and the collapse of the banking sector.

While some analysts see if the dispute over Cyprus will not affect the euro zone, although this time there was some uncertainty. "Cyprus is a small country, so it will not affect much. Contrast to Italy," said Tom Higgins, global analyst and research director of macroeconomics at Standish Asset Management in Boston. "If Cyprus eventually have to leave the Euro, I do not think it will cause a big problem for the euro zone as a whole. I think it will not trigger a general shift in risk sentiment."