Exchange rates euros and the fall of the Greek economy (Part 1)

February 24th, 2012

Here we will investigate Exchange rate euros and look at how the financial crisis within EU countries can have a massive impact on getting the best exchange rate for euros, as its value falls against other currencies like sterling and the dollar.

Take the well documented financial crisis in Greece. It is well known the world over that Greece has simply lived far beyond its means. In fact Greece has spent much of the last two centuries defaulting on its national debt. Greece is a bit like a person who never pays their bills on time, or worse still doesn’t pay them at all. Charges mount up, nobody wants to lend them money and if they do it’s usually at a highly inflated rate of interest that becomes almost impossible to pay off and with no extra money coming in, things very quickly turn sour.

For Greece the grand solution to their problem was supposed to be joining the euro.  In reality (and in line with predictions from financial experts), this simply made the problem worse – exchange rate euros were high to begin with, making the usual holiday market fall into sharp decline and with little to export, Greece’s problems really began.

Nobody was surprised when Greece was first refused entry to the euro, when the currency began back in 1999. The European Union took a view that the country’s debts were too high and inflation completely out of control – it was regarded as simply too volatile and risky. In 2000, it was finally allowed to join after much debate from within the European Union. It is thought that figures were somehow squeezed to help Greece conform to the very tight entry requirements, only for things to return to their previous state once entry had been allowed. It is widely thought that, quite simply, Greece lied to get in.  Could this be possible though – surely the European commission did not allow entry based purely on trust?

This is a debate all of its own and it is believed the Euro, in its quest for domination, relaxed its figures for some countries – a state of affairs that would later haunt them and impact on exchange rate euros for many years to come.

Part 2 of this article focuses on what went wrong once Greece joined the Euro, as if they didn’t already have big enough problems. For all of your foreign exchange needs, visit us at Best Exchange Rates UK.