LONDON – PIMCO has reduced allocations to the euro in response to a planned levy on deposits in Cyprus and is rethinking forecasts of when the bloc will begin its recovery, a senior executive said.
Saumil Parikh, managing director and member of the firm's Investment Committee told Reuters in an interview in London on Tuesday, the proposed terms for a banking bailout, which include the levy, "suggests a more bumpy road for Europe."
"We've reduced our allocations to European currency (in the last 24 hours) because it makes sense to think about this as not only a policy mistake but also a recognition that the euro is far from being a perfect reserve currency," he said.
Parikh highlighted he has not made significant changes since the planned levy was announced but said imposing a levy on depositors would represent "a significant departure" of the euro from other reserve currencies.
(This story is corrected to remove "zone" from first paragraph)
(Editing by Tommy Wilkes)