CORRECTED-PIMCO cut euro exposure after Cyprus deposit levy plan

Tue Mar 19, 2013 5:10pm GMT

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By Chris Vellacott

LONDON, March 19 (Reuters) - 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. (Editing by Tommy Wilkes)

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