Euro drops as eurogroup meeting breaks down, Greece faces bankruptcy

A European Union (EU) flag, left, and Greek national flag fly near the Parthenon temple on Acropolis hill in Athens, Greece, on Monday, Oct. 31, 2011. Europe's plan to solve the region's debt crisis made credit-default swaps covering Greece "ineffective," Moody's Investors Service said. Photographer: Angelos Tzortzinis/Bloomberg via Getty Images

The euro dropped against major currencies on Friday after a eurogroup meeting on Thursday showed another break down, raising prospects Greece may face default and exit the 19-naton region.

Euro-area finance ministers meeting in Luxembourg ended without a deal with Greece.

“Regrettably … too little progress has been made. No agreement is in sight,” Jeroen Dijsselbloem, Chairman of the Eurogroup.

Greek bank withdrawals accelerated this week to raise uncertainty whether Greek banks would open on Monday.

Greek banks may not have enough funds to open on Monday, an ECB representative said.

Deposit withdrawals have reached €2bn so far this week, with a record €1bn on Wednesday, raising concerns Greece would face strong capital flight.

The single currency came under pressure once again after it benefited from the drop in the dollar after a dovish stance from the Federal Reserve.

Donald Tusk, the president of the European council, called for an emergency leaders’ summit on Monday evening, which could be the last chance for Athens to avoid default.

The IMF has warned that Greece has to repay 1.6 billion euros before July 1, otherwise it would a default, as there will be no grace periods.

The EURUSD fell to trade around 1.1308 after hitting a peak of 1.1434 on Thursday, while the EURJPY dropped to 139.15.

Ahmed Mamdouh

Ahmed Mamdouh, Co-Founder and Head of English Fundamental Analysis at FXComment.com, with 7 years of experience in the financial markets. Mamdouh holds a Master’s Degree in Economics from The American University in Cairo and a Bachelor Degree in Economics from The Faculty of Economics and Political Science, Cairo University.

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