Exchange Rate Euros & How The Euro Debt Crisis is affecting The Rest of The World

October 2nd, 2012
Exchange rate euros and the euro zone debt crisis have far reaching effects, way beyond the boundaries of the European Union. The 2008/ 2009 global meltdown has often been described as the result of corporate greed, misconduct and the failure of governments to exert control. Unfortunately we are looking at a far worse crisis than we were faced with back in 2008/2009; it is not just the collapse of banks and corporate institutions but the collapse of entire countries that are at stake.
If Greece waves goodbye to the eurozone, the European Central Bank would have to shoulder a huge loss and could even face insolvency. Greek debt stands at nearly 57 billion euros, debt write offs of this magnitude could be catastrophic for the euro currency.
The European Financial Stability Facility, the association set up to assist in fixing the European liquidity crunch, was sanctioned to access 440 billion Euros, 250 billion Euros of which was left once Ireland and Portugal were bailed out. The European Financial Stabilisation Mechanism was another programme set up to help overcome the euro debt crisis. This programme is dependent on money raised through the financial markets and assured by the European Commission by using the budget owned by the European Union as collateral. It has the power to raise an additional 60 billion. However with insignificant economic growth in the most developed European countries – France, Germany, Italy and Spain, who carry the majority of the guarantees – it seems impossible that this will ever become a realisation, particularly when we consider that Italy and Spain are in troubled times themselves. This will affect exchange rate euros in an unfavourable way.
In a situation like this it is the US Dollar that will appear as the safest currency. When the euro begins to decline, the US dollar is immediately strengthened; this in turn causes the Indian rupee to fall because of the dollars increasing strength and India’s dependence of the US marketplace.  The rupee has already reached record lows, so this could have a meteoric impact on the Indian economy. Find out more about how falling exchange rate euros are having a huge impact on the Indian economy in Part 2 of this article. Best Exchange Rates UK are continually monitoring world foreign currency patterns in order to help predict what will happen to exchange rates, so that we can be sure to give our clients the most accurate and up to date advice when exchanging money.