A Grexit is going to happen – this seems almost certain. “Ha! The Eurozone is in trouble like never before,” eurosceptics may joyfully declare. But guess what? The situation is precisely the opposite of what you, Eurosceptics, think it is. At least for now.
The euro is in trouble? Well, it is. Politicians say that a Greek exit from the Eurozone constitutes a risk to “the entire great European project.” So let us look at the financial markets.
What was the euro to dollar exchange rate on Friday evening, at the end of a turbulent week? USD 1.1339 to €1. And at the beginning of this week? USD 1.1193 to €1. Almost no difference, with a minimal tendency towards… appreciation of the euro. After all, the value of the common currency against the dollar should plummet…
And now, let’s look at the Swiss franc. At 7 pm on Friday, €1 was worth CHF 1.0437. In the morning five days earlier, € 1 was buying 1.0447. So there was virtually no change.
Meanwhile, petrol prices at petrol stations have reached their highest level this year. There’s a whole lot of reasons for that, and the Polish zloty exchange rate is, perhaps, not without significance. And what is the zloty exchange rate? On Friday evening, one euro was worth 4.1748, while in the morning five days earlier, the exchange rate was 4.1422. In other words, the zloty weakened against the euro by PLN 0.03. This means that, just like with the dollar, the euro has strengthened!
And now, as promised, some thoughts about Greece:
So far it seems that we are better off with a troubled euro than with an untroubled zloty, at least when it is important for us to have a stable currency – something to keep in mind for those Poles who took loans in Swiss francs and are anxious ahead of autumn’s parliamentary elections.
So it is better to be a member of a large alliance than to have a small alliance of one’s own. The situation is somehow more stable then.
As it is usually the case in finance (and perhaps in the economy at large), nothing is obvious. Logically speaking, the closer we are to a Grexit, the stronger the zloty – an independent currency well managed by a central bank that is independent (of the ECB) – or should be. But it is precisely the opposite. And this comes as no surprise, as an increase of the risk in Greece undermines the currencies of developing countries, including the zloty.
It remains to be seen what happens next, but for now it may seem that the guardians of the public interest, who suggest that we should keep well away from the Eurozone, are not true guardians of the public interest.
Of course, I would prefer Greece not to exit the Eurozone, although, as you might recall, Greece should have never joined it. And somehow I think that those who categorically refuse to panic over the Greek crisis are right: it is time for the crisis to end. Especially that, after leaving the Eurozone, Greece will probably not be expelled from the EU, and this means that there will be aid schemes, special loans and so-called “reconstruction efforts.” And this will bring about not just cheap holidays outside of the Eurozone, but perhaps also ample opportunity for good business deals. We have already learnt how to make money in Bulgaria and Romania, and Greece will become another such country.
So let’s not panic. I, for one, have no worries about the future and I’m thinking who should get my vote. Because there is one serious problem with the Eurozone: the currency markets do not evaluate the governments’ economic mistakes.
Interesting look at the problem of Greece on the popular worldwide financial blog ZeroHedge
Basic data about Greece – to remind
Interesting fact: what the Polish Ministry of Finance thought about the Greek crisis in 2010