I’m not sure that they really have much choice at the end of the day, as the obvious alternative is no bail-out and a 40% haircut. Perhaps they are ready to play a game of Chicken with the IMF and the EU. I know that Cyprus is only a minuscule player, but it would set a precedent if they were to leave the EUR bloc, and they could wager on the fact that nobody in Brussels or Berlin wants them to set that precedent.
The EUR has rallied slightly, not sure why, so I’ve re-installed my EUR/JPY shorts from yesterday just below 124.00; I’ll have another go.