Cyprus may become the next euro zone trouble spot

According to an analysis published by Reuters, even though Cyprus is in a much better economical situation than Greece, Ireland and Portugal it could become the next problem for the euro zone in the long term and might require a financial bail-out. This prediction is mainly accounted to Cyprus’s downgrade by credit rating agencies due to its exposure to Greece and the decreasing demand from investors in Cyprus bonds.

“There is an increasing risk that Cyprus might join the GIP (Greece, Ireland and Portugal). It is not necessary, but many indications point toward Cyprus getting closer to asking for external help,” said David Schnautz, an interest rate strategist at Commerzbank in London.

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