Best Exchange Rate For Euros: Italy’s Economy on The Brink?

March 26th, 2012

Exchange rate for euros will continue to be affected if the Eurozone crisis continues to worsen.  Over the past 14 months the 16 European countries that have opted into the Euro Currency have been struggling to keep the currency afloat. After a number of their member countries required multi-billion pounds worth of bailouts. Now in late September 2011, the zone is facing yet more economic instability. The key aspect affecting the economic situation (including exchange rates euros), is that the Greek economy had fallen on hard times again and as such the country is calling for a second bailout. As such, other members of the zone, such as Germany and Italy will have to add Euro funds to this pay-out.  For Ireland and Portugal, who have themselves received debt packages, this may force them back over the edge.

While Italy has previously managed to steer their economy clear of requiring a bailout, their international monetary reputation is now being called into question. With businesses struggling, repayments of international loans are not being met. Many businesses have reported 35% reductions in domestic trade. In simplistic terms this does not bode well for the country, as they have become a bad debtor in the eyes of the world. This means that other countries are no longer willing to give the country the best interest rates or extended payment terms. This means that the country will have to pay more on the same amount of loan, which will only compound the initial debt issue. This will have ramifications in terms of the exchange rate for euros, in a broad sense.

This leads to a new wave of bail out fears for the country, which would be catastrophic due to the sheer size of the Italian economy.  The country has now taken positive steps to avoid this situation, such as increasing taxes and cutting government spending. If the Italian economy fails it will have a knock on effect across the Eurozone and attaining best exchange rates for euros. The UK is unfortunately also caught up in the plight of Italy, as are Germany and France, as the banks in these countries have bought Italian debts in the past.  If the country goes bankrupt, the banks will lose the money, which equates to millions of pounds.

To ensure that you achieve the best exchange rate for euros, visit either the business or private currency exchange pages of our site.