Investors show strong interest in eurozone debt: ECB data

19th July 2010, Comments 0 comments

Foreign investors have jumped back into eurozone debt instruments despite the region's deficit and debt crisis, European Central Bank data showed on Monday.

The ECB's balance of payments for May showed net portfolio inflows of 63.9 billion euros (82.8 billion dollars), owing in large part to debt security purchases worth 42.1 billion euros.

Of that amount, a net 39.3 billion euros was spent on bonds and treasury notes, on top of a net 35.4 billion spent on such instruments in April, a sign of strong foreign demand for eurozone debt.

Bond sales by peripheral eurozone countries such as Greece, Portugal and Spain met strong demand on private markets this month, raising hopes that their governments will be able to refinance debt without having to draw heavily on European Union aid.

Europe's single currency has rebounded from a sharp fall in May meanwhile, and traded on Monday for around 1.2950 dollars.

Despite the financial inflows however, the eurozone's balance of payments slipped further in May to a deficit of 5.8 billion euros, the ECB said.

The balance of payments, which includes payments for imports and exports of trade in goods and services, is a closely tracked indicator of a country's or area's ability to pay its way in the world.

It is crucial for the long-term confidence of investors and trading partners.

In April, the eurozone measure had posted a deficit of 5.6 billion euros, revised data from the ECB showed, demonstrating a lack of competitiveness by the 16-nation bloc as a whole.

The overall figure for the eurozone combines surpluses from strong exporting nations such as Germany with the balances of countries which have structural external deficits.

A breakdown of the data showed that seasonally-adjusted exports of goods rose to 131.6 billion euros in May from 124.4 billion in April, while imports rose to 128.5 billion euros from 123.8 billion.

It was the strongest level of exports since the US investment bank Lehman Brothers collapsed in September 2008.

© 2010 AFP

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