Greece vote NO to aid-for-reforms deal

Sunday, Jul 05 2015

First results of Greek referendum show that NO side won, with majority of over 60%. What we can expect now is that market will open with a huge gap probably to the downside. In a larger picture, Greek government should continue its negotiations on Monday, but it is hard to say in which direction they will head now. The head of the European Parliament, Martin Schulz, told German radio that Greece would have to introduce another currency if the “no” vote wins in Sunday's referendum on an aid-for-reforms deal.

"Is Greece still in the euro after this referendum? That is certainly the case, but if they say ‘no’ they will have to introduce another currency after the referendum because the euro is not available as a means of payment," Schulz told Germany's Deutschlandfunk radio in an interview broadcast on Sunday and taped on Thursday.

Greece’s labour minister Panos Skourletis has reacted to the results, and hailed the outcome as a very good thing for democracy.

“The government can go now with a very strong card to continue negotiations [with creditors],” he told reporters outside the the prime minister’s office. Greece’s veteran commentator Pavlos Tzimas has just told SKAI TV that it is vital that an agreement is reached by June 20, when Greece must meet a €3bn debt repayment to the European Central Bank. “But it is practically impossible to have an agreement in less than two weeks as [whatever is agreed] would need to be ratified by parliaments.”

Euro closed on Friday around 1.1110 area. We expect market to gap to around 1.0950, at least initially.

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