The struggling Euro surged on Friday on renewed optimism that European Central Bank (ECB) would soon take more concrete action to help the continent come out of the persistent debt crisis.
On Thursday, ECB President Mario Draghi announced that the bank could begin unlimited buying of debt-laden countries' bonds to help them slash borrowing costs.
Mr. Draghi said the ECB could intervene openly in the bond markets under SMP program to help debt-laden countries. But he also underlined that the program would depend on countries holding up their end of the bargain.
The announcement provided a much-needed boost to investors. The Euro jumped as high as $1.2392 on Friday.
Speaking about the new plan, Christian Schulz of Berenberg bank said, “If the ECB convinces markets that it is providing a reliable safety net for solvent sovereigns that stay on the reform path, it may lure more investors back into these markets.”
Mr. Draghi new plan to tackle insurmountable debt crisis has surfaced as borrowing costs for Spain and Italy are back near to levels that forced Ireland, Portugal and Greece to seek huge bailouts.