Interested to know people's thoughts on a Greek Exit and the effect on the Euro currency?
Let's assume Greek exit, they convert their Euro's into a Local Currency, then I see the following occurring:
1. Reduction in the money supply for the Euro's, as some of the money supply is converted.
2. Removes one of the weaker economies from the Eurozone, providing stronger economic data to support the currency.
Hence, have a strengthening affect to the Euro as a currency?
Having said that, the main risk with a Greek exit is that Portugal, Spain and even Italy could eventually go down a similar path, but I think that this is unlikely.
If Greece move to a local currency, I think they will struggle to find foreign investors to fund their debts given their history of weakening their local currency, a major risk to any foreign investor.
Let's assume Greek exit, they convert their Euro's into a Local Currency, then I see the following occurring:
1. Reduction in the money supply for the Euro's, as some of the money supply is converted.
2. Removes one of the weaker economies from the Eurozone, providing stronger economic data to support the currency.
Hence, have a strengthening affect to the Euro as a currency?
Having said that, the main risk with a Greek exit is that Portugal, Spain and even Italy could eventually go down a similar path, but I think that this is unlikely.
If Greece move to a local currency, I think they will struggle to find foreign investors to fund their debts given their history of weakening their local currency, a major risk to any foreign investor.