Change from the Cypriot £ to the Euro - as of 1st January 2008

 

As of Tuesday the 1^st January 2008 the Cypriot £ will no longer exist. In its place will be the Euro. For weekly updates and comments on the Euro please go to:

 

http://smartcurrencyexchangeeuro.blogspot.com

Weekly Cypriot £ rates and comments - week commencing 24th December 2007

 

Sterling has had a bad week. First the minutes of the last Bank of England interest rate meeting were released and showed that the vote to reduce interest rates was unanimous. This surprised the market. Then the balance of payment figures were released. These were very bad with a huge net outflow of funds from the UK. And now the Christmas retail period is not going as well as hoped and house prices continue to fall in most places. All doom and gloom so it is not a surprise that sterling is suffering. Sterling only seemed to make a gain against the South African rand. Shows how the market views the new head of the ANC in South Africa! But I suppose they did win the rugby world cup.

 

 

The Cypriot £, which converts to the € next week, sits at Cy.£0.805/£1 inter bank. Inflation continues to be of concern to the European Central Bank. So any cuts in € interest rates are very unlikely short to medium term. But clearly the credit crunch is having an affect on Euro land as the ECB lent €350 billion to financial institutions last week who were having difficulty borrowing elsewhere. And I still feel that Euro land cannot be immune to the slow down elsewhere. Talking to one of my clients who does a lot of business in Euro land he said there was a lot of pain being suffered by Euro land exporters given the strong € exchange rate. So this is the very last note on the Cypriot £. From next week the Euro is the currency of Cyprus.

 

ALL THE VERY BEST FOR 2008.

Weekly Cypriot £ rates and comments - week commencing 17th December 2007

Sterling has been steady and has gained against most currencies apart from the US$. Economic news has been mixed with pressure on house prices and sales volume countered by a surge in production price inflation. The latter means that the market has become unsure on future cuts in UK interest rates. The central banks of the UK, US and Euro land agreed a financing package in an attempt to add liquidity to a market that was/is in danger of grinding to a halt. Still uncertain times and an uncertain future for sterling.

 

 

The Cypriot £, which is pegged to the € which is still the preferred currency when the choice is the US$ or sterling, sits at Cy.£0.809/£1 inter bank. And inflation is also of concern to the European Central Bank. So any cuts in € interest rates are very unlikely short to medium term. But clearly the credit crunch is having an affect on Euro land as the ECB were part of the consortium noted above. And Euro land cannot be immune to the slow down elsewhere. They may not have the overhang of highly priced properties throughout Euro land but businesses need to export and if elsewhere is contracting and the strong € makes these exports less competitive then the € will suffer. Please can all readers note that as of the 1^st January 2008 the € will become the official currency of Cyprus.

Weekly Cypriot £ rates and comments - week commencing 10th December 2007

Sterling lost ground against everything this week. The Bank of England cut UK interest rates by 0.25%. A slight surprise but on the back of weak economic data, including falling house prices and poor retail sales, better to start the cuts earlier rather than too late. There will be further reductions in UK interest rates next year. Will lead to weakness in the short term but longer term probably a plus for sterling.

 

 

The Cypriot £ sits at Cy.£0.808/£1 and is pegged to the € which is still the flavour of the month. The European Central Bank kept Euro land interest rates on hold and even inferred that inflation was still their major concern. Clearly they are dancing to a different beat in Euro land relative to the UK and the USA. I wonder how self delusional the ECB's position is. France and Italy have been complaining about the strong € since the summer and as noted previously the Irish and Spanish property markets are suffering. I still believe sterling is oversold and that it is a good time to bring back Cypriot £'s. We will have to wait and see if I am right.

Weekly Cypriot £ rates and comments - week commencing 3rd December 2007

 

Sterling had another steady week. The Bank of England is giving mixed messages. It is concerned about inflation but at the same time concerned about the slowing UK economy. House prices are falling while fuel costs are going up. The market is confident the BOE will cut UK interest rates but is unsure when. Some are expecting a cut as early as the next BOE meeting in early December. We will have to wait and see. As noted previously sterling is fairly friendless.

 

The Cypriot £, which is pegged to the €, has also had a steady week and sits at Cy.£0.809/£1 inter bank. Obviously still reasonably close to four and half year highs against sterling and is unlikely to weaken in the short term against sterling. As noted previously though the strong € is hurting Euro land exports. Euro land housing markets are also suffering. One meeting last week with a Spanish property developer highlighted how weak the Spanish housing market is. I'm sure this weakness applies elsewhere in Euro land. Good time to bring Cypriot £'s to the UK.