The euro gained on Thursday morning as investors found security in a statement from the European Central Bank, which claimed the bank was willing to fund Cyprus' banks within certain limits.
The currency rose to 1.2944 at 6:31 GMT on Thursday while eurozone officials continued to negotiate terms of the deal.
After Cypriot leaders rejected the EU's first set of terms for the bailout, a levy that would tax large bank accounts by nearly 10 percent, the tiny island nation began working frantically to find another solution.
Cypriot officials put together an alternative plan to utilize the nation's pension funds to raise 4.2 billion euros, which would cover most of the 5.8 billion euros the EU has required the country to raise in order to unlock its bailout funds.
However, the plan wasn't well received as EU officials claimed this option would increase the government's already unsustainable debt burden.
Cyprus also turned to Russia for help and Cypriot Finance Minister Michalis Sarris headed to Moscow to meet with Anton Siluanov, his Russian counterpart. Although Sarris described the meeting as constructive and claimed he would not relent until a deal was reached, Russian officials have made no moves that indicate a deal is forthcoming.
Cyprus is working to offer Russia access to untapped natural gas reserves in exchange for assistance as well as trying to extend and refinance a near 3 billion euro loan set to mature in 2016.
According to the Wall Street Journal, many believe Russia isn't likely to agree to aid until the eurozone works out a deal.
Cyrpus' parliament will convene on Thursday to discuss the potential of a financial meltdown and create legislation to prevent capital flight when the banks reopen.
The nation's banks will remain shut until Tuesday, March 26th in order to buy time for officials to rework the terms of the bailout.
(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Copyright Benzinga. All rights reserved.