Infosys fears euro could collapse

Bangalore, July 12 (IANS) India's IT bellwether Infosys fears that the euro could collapse due to the sovereign debt crisis in Greece and Italy and the banking crisis in Spain.

"We fear euro could collapse because the European Union (EU) has structural problems as its member-countries do not have fiscal or political union," Infosys chief financial officer V. Balakrishnan told IANS here Thursday.

Noting that it is difficult to have a single monetary policy for the member countries owing to different levels of growth, challenges and unemployment, Balakrishnan said instead of tackling the problem structurally, they were putting a band-aid by infusing more funds into the ailing banks and financial institutions, which have defaulted.

"They will keep putting band-aid by lending more money to defaulting banks and institutions, which do not solve the problem," Balakrishnan said on the margins of the company's dismal first quarterly (April-June) results of the 2012-13 fiscal.

"We have lost $30 million in hedging due to volatility in the currency markets. We expect the rupee to remain weaker at 55 to a dollar during the next two quarters of this fiscal."

A lot of things have happened and unforeseen developments have taken place in Europe since April due to the sovereign debt crisis in Greece and Italy, and banking crisis in Spain.

"As the EU is grappling with its euro crisis, globally dollar has strengthened its value against major currencies," Balakrishnan said.