Greek property news

Sterling makes the most of its I’m-not-a-euro credentials. Euro has no such defence to Greece’s problems.

The pound drifted down from €1.14 to €1.13 before jumping nearly two cents higher on Thursday. It peaked at €1.1550 on Friday and opened in London this morning at €1.15.

Sterling has been doing its best to develop a career in not-being-a-euro. With the problems in Greece holding investors’ attention, the pound wore a badge of non-involvement on its sleeve.

The Bank of England’s Quarterly Inflation Report (it does what it says on the tin) raised the spectre of a further round of quantitative easing. It was a possibility that sterling’s supporters would have preferred not to see. There is still the impression – warranted or otherwise – that the Bank is happy to see the pound weaken and that it chooses its language to help that cause.

And if the statements out of Paris, Berlin and Luxembourg over the last few month are anything to go by, the majority of Euroland finance ministers would like to see a more competitive (i.e. weaker) euro. This might explain why they have put so little effort into reassuring investors about their plans to help Greece out of its budget bind. An ‘agreement’ in that direction masterminded by the EU last week was worth less than the very small piece of paper it was printed on. In order to gain the approval of France and Germany it had to be pruned so severely that all it said was ‘Don’t worry’. Its exact wording was ‘Euro area member states will take determined and coordinated action if needed to safeguard stability in the euro area as a whole.’ As reassuring statements go it was useless.

It did not help matters for the euro when revised figures for the fourth quarter of 2009 showed slower economic growth than previously thought. Until EU leaders can formulate a coherent and credible plan to make Greek government bonds saleable the euro will remain weighed down by fears about the fiscal viability of Club Med.

After three months spent between €1.09 and €1.13 the pound has attached itself to a slightly higher range between €1.13 and €1.16. For the moment, the euro’s Greek albatross is a significant burden, balancing investors’ slightly different worries about Britain’s political and financial situation. Moneycorp suggests that buyers of the euro investing in the Greek property market should take advantage of any spikes to hedge 50% of their exposure.

The pound and the dollar are likely to strengthen further against the euro. This is subject to the UK economy continuing to claw its way out of recession and the decision of what the Euroland finance ministers will do to help the economy in Greece. In this short term situation, buying property in Greece is cheaper for UK and US buyers.

It is always best to transfer currency to Greece via the commercial rate and not the tourist rate. Currency specialists like Moneycorp often offer much better exchange rates than high street banks, and their expert dealers offer you guidance to help to ensure you are sending your money to Greece when the exchange rate is at its peak within your given time frame

It is always best to transfer currency to Greece via the commercial rate and not the tourist rate. Currency specialists like Moneycorp often offer much better exchange rates than high street banks, and their expert dealers offer you guidance to help to ensure you are sending your money to Greece when the exchange rate is at its peak within your given time frame

For information about setting up a bank account in Greece and Skopelos please see: Legal info

To find out about the best ways to transfer money to Greece and Greek Islands

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Roger Fox – Glossa Houses, Skopelos, Greece

Within minutes of France and Germany publicly pledging support for Greece in its struggle to reduce the budget deficit, the euro went from 1.15 to 1.13 against the pound.

Two hours later, when it became clear that no figures were going to be attached to these pledges, the pound went back to 1.15. Two days later it is 1.152 and the currency markets are predicting that the euro will weaken further over the short term.  Today Monday 15th February 2010 the euro is 1.157 – Moneycorp

Clearly, this situation will continue until “support for Greece” becomes a proper financial package. Under normal circumstances, this would be a job for the IMF, but it is difficult for leaders of the eurozone countries to have the IMF saving the euro.

Perhaps more important in the world of realpolitik is the fact that the current head of the IMF is Dominique Strauss-Kahn and a potential future challenger to French President Sarkozy; the sight of Strauss-Kahn riding in on a white charger to rescue the euro would be politically unwelcome – to understate it massively. Therefore expect delay.

Greece has two important dates coming up when the government has to repay outstanding loans – 20th April and 19th May. Given that a Greek default cannot be allowed to happen, something will have been fixed up by then. The smart money says that the eurozone leaders will swallow their pride and allow the IMF to sort out a loan for Greece.

Before that happens, the pound and the dollar are likely to strengthen further against the euro (subject to the UK economy continuing to claw ts way out of recession), making Greek property cheaper for UK and US buyers in the short term.

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