Once again, Greece is on the verge of leaving the eurozone. “We still do not believe that a ‘Grexit’ is likely,” one bank executive said. “Furthermore, even if it does occur widespread contagion is unlikely. However, while the likelihood is small, a Grexit with contagion across the eurozone would have huge implications.”
But are treasurers worried? It doesn’t seem like it, according to observers.
Currency markets and, to a certain extent bond and equity markets, are much calmer about the latest Grexit fears than a few years ago, noted Amol Dhargalkar, Managing Director, Global Corporates Sector for Chatham Financial. “As a result, most corporates this time around have not worried about this,” he said. “We’ve had no single conversation about the possibility of a Greek exit. Anecdotally, the number of such conversations has been declining as we’ve been dealing with this long running drama.”
According to Dhargalkar, companies with meaningful exposure to Greece have already done what they needed to do to adjust. “As recently as two years ago, we were having conversations with CEOs and CFOs who were really worried about moving cash out of euro altogether and into dollars,” he said. “We are seeing a lot less of this type of concern right now.”
It could be that familiarity with the saga has led to a level of complacency. But more likely, the markets are sensing that there’s a desire to complete a deal.
As for treasurers, it’s uncertain whether a Grexit would strengthen or weaken the euro. One FX expert said that depends on whether shedding the devastated Greek economy would benefit the eurozone and the currency, with other economies mostly flat or growing. On the other hand, he noted, the shadow cast by a Grexit over the future of the eurozone could be dark enough to weaken the currency.
“The volatility we’ve experienced in the last year-and-a-half has become the new normal,” he said. “Companies may not necessarily be thinking in terms of a Greek exit, but more broadly about how they approach currency risk management and how to put in place a program that would achieve their objectives.”