Euro Steady at $1.30 As Portugal Looks for 1.3 Billion Euros to Cut

  on April 09 2013 9:01 AM

The euro continued to trade at $1.30 on Tuesday morning despite uncertainty following Portugal's rejection of European Union mandated spending cuts.

The common currency has been under a lot of pressure recently as many of the bloc's southern members have begun to openly resist the eurozone's austerity driven recovery plan.

The Portuguese Constitutional Court turned down the next round of budget cuts ordered by the EU which would have slashed spending on state workers and retirees.

Following Friday's ruling, Fitch Ratings released a statement on Monday cautioning that if the ruling stands, it could prove to be a difficult roadblock for Portugal in the future. At the moment, the ruling suggests that spending cuts which affect the city's workers are unconstitutional.

Now, Portuguese Prime Minister Pedro Passos Coelho is tasked with the near impossible feat of finding the 1.3 billion euros elsewhere in his budget.

Portugal was to receive two billion euros this month as part of its bailout plan, but now officials say the earliest the money can be released is May, if it is released at all.

According to the Wall Street Journal, German Finance Minister Wolfgang Schauble told a German radio station that Portugal had no choice but to find the money elsewhere.

When the Portuguese government has come up with a viable solution, they will have to present the plan to the troika, which will assess whether or not it is acceptable.

In Brussels, US Treasury Secretary Jacob Lew met with EU leaders on Monday before heading to Frankfort where he spoke to European Central Bank President Mario Draghi. So far, the meetings have centered on moving forward with plans to create a unified banking system and ways to stimulate the region's recovery in the months to come.

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