Debt crisis: G-20 abandons Europe

The Group of 20 countries has failed to increase the resources of the International Monetary Fund (IMF) to fight the debt crisis in Europe.Governments are awaiting further details of Europe's week- old rescue package for Greece before they commit cash, German Chancellor, Angela Merkel, said yesterday in Cannes, France.Greek Prime Minister, George Papandreou, struggled to hold on to power after the largest opposition party rebuffed his overtures to form a national unity government, raising the prospect of elections that could delay aid needed to prevent default.According to Bloomberg, this development is already impacting on the South African economy; one of Europe's biggest trading partners.The rand depreciated 0.6 to 7.8947 per dollar yesterday in Johannesburg, leaving the currency down 2.2 per cent this week. Against the euro, the rand gained 0.1 per cent to 10.8438, extending its five-day advance to 0.9 per cent.'At the moment the market is pretty shell-shocked, and traders are keeping minimal positions,' Chris Becker, an analyst at Johannesburg-based Econometrix Treasury Management said.The rand rallied the most in a week yesterday against the euro and gained versus the dollar after the European Central Bank unexpectedly cut its benchmark lending rate.'Markets are swinging from euphoria to despair on the back of rapidly changing news and rumors,' John Cairns and Nema Ramkhelawan-Bhana, currency strategists at Rand Merchant Bank in Johannesburg, said in a research note.Anglo American Plc's offer to buy the Oppenheimer family's 40 per cent stake in De Beers for $5.1 billion helped limit the rand's decline relative to emerging market peers, according to Econometrix's Becker.
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