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Cyprus Hits Hedge Funds with Long Euro Position Off Guard

Value Walk – Cyprus was the fifth nation in EU to seek rescue from the Torika in an attempt to save itself from a burgeoning debt crisis. However, the €10 billion that were set to reach the country as part of its bailout plan were delayed when Cypriot parliament postponed the vote on the bailout terms. The conditions for the rescue money came with a catch, which required even the ordinary depositors in Cypriot banks to pay an additional tax. These taxes were proposed in order to raise €5.8 billion for the bailout package. The terms of the plan have been severely criticized not only within the country but also by Russian government.

Russia is one of the biggest investors in Cyprus and consequently Cypriot banks owe a major chunk of their deposits to Russia, Moody’s Investors Service estimates that the Russian funds amount to $31 billion. Vladimir Putin called the terms of the bailout, unfair, unprofessional and dangerous.  

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