A political deadlock between Greece's leading parties has again sparked concerns about a possible bankruptcy and its future in the eurozone. Last weekend’s election left no party with a clear majority. And after New Democracy leader Antonis Samaras failed to form a government, the mandate of forming this coalition is now in the hands of the leftist Alexis Tsipras.
However, the possibility of forming a new coalition government took another hit when the demands of Tsipras were quickly rejected by Samaras. Greek voters voted against the two mainstream parties which they blame for pushing the country deeper into a recession.
And while most Greeks say they want to keep the euro as their currency, this looks now to be more unlikely as Tsipras has remained firm on cancelling the terms of EU-led bailout package. All of this has cast a ripple effect across financial markets.
The euro is falling to a near 3 month low, equities around the world have slumped, and peripheral bond yields are climbing sharply higher. But market players say the euro could fall gradually towards 1.28 dollars over the next few weeks.