Tuesday 26th March 2013
Good afternoon to regular readers and new readers alike. If you have stumbled across my blog looking for the best exchange rates, and information on what moves the rate to see what may happen in the coming weeks and months, you’ve come to the right place. Today I'll look at what the current situation means if you need to buy Euros, and also look at the implication of EU events on those selling Euros back to Pounds.
Since my last post things have progressed a little in Cyprus, and now an agreement has been put in place, but the topic is still dominating headlines in both the national press and financial supplements. So what have I got for you today? I’m going to have a look at why the Euro remains weak despite the agreement, and look at the possible implications of the deal on exchange rates. I will also look at Sterling, what data is coming soon and which way exchange rates may move in the coming weeks.
If you need the best exchange rates, don’t forget I can source commercial levels significantly better than the banks, so send me a free enquiry today to find out more.
Right, let’s get cracking and today I’m covering the following points:
- Deal in Cyprus agreed
- Why is the Euro still weak?
- Outlook for Sterling in coming weeks
- Credit downgrade keeps pressure on Sterling.
Cyprus – deal agreed, but Euro remains weak.
So what was agreed?
Cyprus has agreed to a significant restructuring of its banking sector, along with other measures such as tax rises and privatisations. The measures are designed to raise billions towards the bailout, but protect bank customers with deposits of 100,000 euros or less. For those with more than that, it’s not looking very good at all. You can read in depth what was agreed here on the BBC site.
This may also have a wide impact on the Eurozone, however. Some analysts have warned that the measure would set a dangerous precedent in the world of Eurozone bailouts.
In previous rescues, individual accounts have been protected and governments, private investors and banks have picked up the tab. Bank customers in other European countries may begin to fear that their savings will also be targeted should their economies run into trouble in the future.
So could the same thing happen elsewhere?
It could, but for the moment this is unlikely. You have to remember that Cyprus is Europe’s 3rd smallest economy, and much of the savings there are held by Russians. In terms of the bailout amount vs. the countries GDP, their bailout was similar to Greece’s. I personally think that the ECB is loath to bailout out Russians.
What does this mean if you need to buy Euros?
I need to move Euros out of the Eurozone, what does this mean for me?
I’ll post more news on Thursday to keep you all updated how the events are affecting exchange rates. At the moment, banks remain closed, there is a freeze on transfers, and nobody knows what the future holds.
What's happening is remarkable, more so that journalists and politicians are calling the plunder of savings a "haircut". I've got another word for it, and it rhymes with 'slobbery'. These really are crazy times we’re living in!