In brief, the Eurozone debt crisis has had the following effects on the foreign exchange rates:
1. It has weakened the euro, as doubts about the economic stability of the Eurozone’s members, not to mention the survival of the currency itself, continue.
2. It has benefited currencies belonging to nations perceived to be stable by comparison, such as the UK pound and US dollar.
3. It has dampened global risk appetite, as Europe’s downturn impacts economies around the world including China and Australia. This in turn has weakened the Australian dollar among others.
4. It has led the Swiss National Bank to peg the franc to the euro at 1.20, to prevent the franc rising and exploding Switzerland’s export sector.
Furthermore, given that the Eurozone debt crisis shows no signs of slowing down, these effects will continue for the foreseeable future. For instance, the possibility that Spain will need an EU bailout will continue to encourage investors toward safe havens such as the UK pound and US dollar. In addition, the chance that tax-the-rich candidate Francois Hollande will be elected President of France will continue to sew doubts about the future of Europe, dampening global business activity and hurting far-off places like Australia.
Of course, if you’re in the UK or US and need to change currencies these are arguably good things. They mean you’re likely to get better exchange rates when you buy euros, or more exotic currencies such as Australian dollars. In this sense, economic bad news in Europe doesn’t guarantee you get a worse exchange rate.
I do hope that answers your question. Of course, if you have any other questions about changing currencies, feel free to Get in Touch. One of our dedicated dealers will be delighted to provide an in-depth personal response to your query.