Euro Currency Update July 2011

Published on 07/07/2011 in Your Spanish Home

Over the last couple of months or so the market has been preoccupied with Greece, unusually for this time of the year its not holiday bookings or resorts they have been talking about but how is Greece going to repay its debt. 

As we know, the good citizens of Greece have also taken to the streets protesting against all of the measures the Government have had to consider implementing to reduce its debt and their concern of course is how it will hit their pockets, so not really an unnatural reaction.

Like many of the countries who were the last to enter the Eurozone  the funds they received certainly helped the feel good factor and the governments “closed eyes” approach made things seem very rosy, but the gravy train had to stop at sometime which is one of the reasons why we are seeing the situation as it is now.

Euro calculatorSo what is happening now to fix the problem?  Of late the Greek parliament have finally had to agree a series of measures to increase taxes, cut public spending, privatise assets and provide redundancy to many public sector employees; these measures have enabled the Finance Ministers within the Eurozone to release a further 12 billion euros to cover current “expenses” and hopefully avoid a default on the government backed bonds.

With all the issues you would have expected the euro to become a weaker currency.  However this has not been the case, support has come from the Chinese who have propped up Spanish banks and have said of late that “fundamentally the eurozone is strong” and have continued to invest in the Euro. 

By doing so they are getting a higher return as interest rates within the Eurozone are higher than the USA and the UK, where both countries have said that to increase interest rates would be a huge problem to the recovery of their economies so whilst both the US and the UK are  maintaining this stance, expect the Chinese to continue investing in the Eurozone and maintain a level of strength  for the euro.

Now its not just the eurozone that has its fair share of bad news, in the UK we have recently heard that retail sales are down and people are not spending. The most recent figures for the Services Sector (which covers restaurants, hotels etc) has shown some very disappointing statistics, link this to the closures of many High Street household names, the Bank of England saying that mortgage repossessions are likely to increase then you have a lack of confidence in the recovery path the UK is taking, although we all know this is a longer tem commitment to stability and economic growth rather than a  short term stop gap.

At the time of writing we see the pound at a low of 1.107 compared to the highs of just a month ago of 1.152 which is a loss of  around  4.4 cents; a massive difference for all our budgets, great of course if you are sending funds back to the UK. 

No matter which way you wish to transfer funds, give our partner Moneycorp a ring as they will save you money and beat your bank rate.

If you are selling your property in Spain then talk to Moneycorp about sending your money back to the UK for a low fixed fee. 

Written by: Moneycorp

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Dudley said:
08 July 2011 @ 21:47

There is a huge fix going on here with the Euro to protect the big money people and their pensions etc, it will all come out in the wash as they say, bide your time and you'll see it all come out in the rinse.

pheasent plucker. said:
08 July 2011 @ 20:37

The Euro is infact the Greater Deutsch Mark,the Club Med countries wont be able to survive the heat from the Frankfurt Bankers kitchen,midasgold is spot on,"its like giving more booze to an alcoholic", sooner or later they will run for the kitchen door, or the Euro will be made into a EURO, and EURO LITE, i have put on hold my Spanish purchase accordingly.

Patricia said:
08 July 2011 @ 18:31

Fully agree with both your posts, Mario.

SuperMario said:
08 July 2011 @ 18:20

And when are we going to be told why Greece's public debt was allowed to get so bad? It is largely because over the past ten years they were persuaded by French and Germany to borrow billions of euros at low interest rates, mainly to buy arms from German companies like Siemens, and to finance the Olympics (20 billion over budget). Now the interest rates have rocketed so Greece can't even afford to pay back the interest.

SuperMario said:
08 July 2011 @ 18:16

Why is it bad news that people in the UK have cut down on spending? If people have finally learned to live within their means and not borrow money to buy more and more stuff they don't really need, that sounds like good news to me.

midasgold said:
08 July 2011 @ 12:26

It is not a question of IF Greece will defualt but WHEN.Putting more money into their corrupt system is like giving more booze to an alcholic.

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