Market speculation on Portugal irrational: German minister

29th November 2010, Comments 0 comments

Germany's finance minister on Monday slammed market speculation over the financial woes of Portugal as irrational as he hailed a rescue deal for Ireland that he said would bring Dublin back on track.

"The speculation on the international financial markets can barely be explained rationally," Wolfgang Schaeuble told German radio station Deutschlandfunk.

Countries are put under pressure, leading to "fear effects," Schaeuble said. "The markets can make a lot of money in this way," he added.

Portugal "is under pressure at the moment and therefore it is important that Portugal implement the measures" announced to reduce its deficit, the minister said.

The minister also hailed an 85-billion-euro (113-billion-dollar) EU-IMF rescue package for Ireland after an emergency meeting on Sunday designed to head off the growing pressure on Portugal and Spain.

Schaeuble's comments came as the euro sank in Asian trade Monday with the Ireland deal failing to allay fears that the two southern European countries could be next in line for a rescue after seeing their borrowing costs soar.

Describing the package as a "big success for Europe," Schaeuble said: "I think this programme is suitable for Ireland and if it consistently implements what it has agreed, it can return to a solid and sustainable economy in a few years."

He appealed for "a bit more calm and a bit more reality" in markets and said there were "no surprises" in new measures agreed by European finance ministers to ensure private investors contribute to the cost of future bailouts.

Ministers agreed that the private sector would in future share the burden after an existing emergency fund expires in 2013.

© 2010 AFP

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