Cyprus Deadline and the Impact on EUR Exchange Rates
The European Central Bank (ECB) has given Cyprus until Monday to come up with the necessary money in order to receive their much needed bailout. If the country is unable to find the money, though to be in the region of about €6bn then they will not receive the much needed financial assistance from the ECB which could then lead to the country defaulting on its debt repayments and therefore eventually being forced out of the Euro. This of course could have wide reaching implications not just on the Euro and other Euro nations but the global economy. Last year we saw a long drawn out saga with Greece coming close on more than one occasion to defaulting on its debt repayments and it appears that the ECB has learnt from that situation and does not want the uncertainty to last for an elongated period of time, hence the deadline.
To find the necessary funds a number of solutions have been raised one such solution being an investment from Russian but according to the Russian finance minister this has failed. This could mean the recently rejected bank levy, where anyone with a deposit in a Cypriot bank will be charged a fixed one off percentage could be back on the cards. Not only could this levy incense the Cypriot people and all those that have money held on the island it would likely put off any outside investment into the country and possibly worse still it could set a precedence that other financially challenged economies could follow.
The current situation and the fact that leading political figures in Cyprus are now working against the clock is likely to mean EUR exchange rates will remain volatile today. If no plan B is agreed then we could see GBP EUR exchange rates soar back up to the high levels we were trading at towards the start of this year. However, if a plan B is agreed then it is likely to bring back some stability to the single currency and also with it confidence for outside investors which could mean we see the Euro strengthen especially against the Pound.
This means that at present the currency markets are very unpredictable and the exchange rates could move dramatically on the back of the Cyprus vote. So, if you need to buy Euros or if you are looking to sell Euros it will be important to stay in close contact with your account manager here at Foreign Currency Direct plc. Our experienced currency brokers can be your eyes and ears on the market and will keep you up to date with all the latest news regarding Cyprus and the exchange rates. So, to call one of our friendly and expert currency brokers call us on 01494 849752 or alternatively email me directly on firstname.lastname@example.org