Today’s trading has been fuelled by speculation, rumour with only brief new detaisl. It is clear that the initial announcement on Saturday caught many investors off-guard, however little clarity has emerged since then.
As currently stands Cypriot banks will be closed tomorrow (Tuesday) and potentially remain closed on Wednesday and Thursday. The parliamentary vote to ratify the bank deposit haircut has been postponed, to give politician’s time to renegotiate the EU Deal.
The Cypriot banking system is on the verge of collapse, yet it seems Cyprus is being singled out as an isolated case. The country doesn’t have the political power or size and is in essence being forced to make tough choices.
Investors do not like uncertainty, and that is the current situation in Cyprus. In attempting to protect individual savers, larger deposits would be hit harder, which is what the Cypriot politicians are trying to avoid. It is likely when the banks re-open; there will be a mass exodus of capital to outside of the Cypriot central banks remit.
As a reminder Abshire-Smith is FSA regulated and our client funds are held in segregated accounts with UK banks.