NEWS

Euro’s rise threatens Greece’s exports

The strong euro has proved something of a double-edged sword for the Greek economy – protecting it from inflation but also having a negative effect on exports and tourism. Experts believe that the euro may soon climb to 1.46 dollars, from the current 1.36. Greek shipping companies, meanwhile, who have substantial funds in US dollars, appear to be holding off from converting them into euros in the hope that the exchange rate will turn in their favor. However, if currency experts are correct, the shippers might have to hold on to their dollars for quite a while. In what has proven to be a significant year for the euro, the value of the European currency has risen by over 8.5 percent against the dollar. Despite its relatively anemic entrance on the international scene in 1999, when it quickly plunged from its initial exchange rate of 1.17 dollars to below 0.89 dollars, the euro now seems to be dispelling the myth that would have the dollar as the only true global currency. Most central banks around the world, for example, are now looking to boost the amount of euros in their reserves. However, eurozone governments and central banks are concerned about the effect the high euro is having on exports from the area and are faced with the dilemma of whether it is better to possess a powerful currency or to be in a position where competitiveness gets a boost. For Greece, this concern is even more acute, as its exports, despite a recent rise, are by far the lowest among eurozone countries.