Soros Says Euro-Area’s Failure Would Have a ’Catastrophic’ Global Impact
Jan. 5 (Bloomberg) -- Alan Ruskin, global head of G-10 foreign-exchange strategy at Deutsche Bank AG, talks about the outlook for global currencies in 2012. Ruskin speaks with Betty Liu on Bloomberg Television's "In the Loop." (Source: Bloomberg)
Billionaire investor George Soros said a fracturing of the euro area would have “catastrophic” consequences and that markets have started pricing in the possibility of the region breaking up.
The disintegration of the 17-nation currency bloc would affect Europe and the “entire global financial system,” Soros said in the southern Indian city of Hyderabad today in response to questions.
Leaders in the euro region have struggled to solve a sovereign-debt crisis that’s hampered the global recovery and is now in its third year. Greece, Ireland and Portugal have already been forced into bailouts and the European Central Bank has provided unprecedented cash injections, easing borrowing costs for Italy, Spain and Belgium.
Soros said it isn’t currently clear whether the crisis will be contained, adding many people “feel” it’s “over the brink” and “insolvable.”
The euro fell to a 15-month low against the dollar on concern the region’s governments and banks will struggle to raise funds. It weakened 0.5 percent to $1.2875 at 9:38 a.m. London time, after falling as much as 0.7 percent to $1.2848, the least since September 2010.
Markets are “far from equilibrium and extremely difficult to predict using the yardsticks or methods that were used in the past,” Soros said, adding investors “have to play it safe” and that “unless you can anticipate events correctly, it’s better to do nothing than to keep on losing money.”
Soros is best known for making $1 billion in 1992 betting the Bank of England would be forced to devalue the pound. He has given away more than $8 billion in the last 30 years to promote democracy, foster free speech, improve education and fight poverty around the world, he said in a recent essay.
To contact the reporters on this story: Sharang Limaye in Hyderabad at slimaye@bloomberg.net; Tushar Dhara in New Delhi at tdhara1@bloomberg.net
To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net
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