Will the value of the euro increase if the piigs depart?

The reflex thought on the value of the euro if Greece or any other country were to leave is that such a traumatic destabilising event would decrease it’s value. Hooray, French wine is cheaper again!

But surely the value of the euro must currently be pricing in all the terrible debt of P, I, I, G and S?

If any of these countries were to leave the euro, they would take their debt with them. Wouldn’t the value of the euro then go up?

The irony is that while a strong currency is usually ‘a good thing’, the northern European countries already regard the value of the euro as too high, damaging their exporting industries.

The euro economies of Northern Europe may be just as vulnerable to the fall out of losing one of the piigs. At least they’ll have the comfort of English cheese being cheaper for them…

Explore posts in the same categories: Economics

Tags: Debt, Euro

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