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05/02/07 -
Latest Cyprus Currency Market Moves |
Have you noticed that our pound has fallen by 8 per cent
in value against sterling over the last eight months? Is this not a surreptitious realignment of the two currencies?
And why has it remained stable against the euro during the same period; surely it’s due to the disparate amount of
business we do with Brits compared to euro-based economies; 60 per cent of our tourism and property sales are aimed
at the UK, not forgetting those 350,000 Anglo-Cypriots who are forever coming and going. And we are blessed with
numerous well staffed foreign embassies, not forgetting our permanent guest, the UN peacekeeping force. And then
there are our colleges and thousands of foreign students.
An excellent cousin of mine, the treasurer at the CTG (Cyprus Tourist Guides), who joined the board of the Worldwide
Tourist Guides at their bi-annual conference in Cairo last week, reported tourist numbers were declining in Cyprus:
18 hotel closures this winter in Paphos alone, due to fewer bookings by Saga Settlers, who book their winter breaks
in late summer to places like Cyprus and southern Spain. Last year, prices were greedy in anticipation of an $80
barrel of oil. But oil has fallen below the magical, let’s all get our economies going again, price of $50 and we’ve
been caught napping.
Bookings will undoubtedly pick up again this year now that bargain flights are back on tap.
When we hear talk about Stock Market meteoric rises, nobody mentions those seven years of famine endured by
investors throughout the world at the hands of investment trust managers who’ve just paid themselves (3,000 of ’em
at the London Stock Exchange) more than a million pounds each in annual bonuses. A hundred dollars invested in an
index linked fund at the market high of 2000 is worth only $118 dollars today; that’s if you pick an honest one and
before you deduct management fees. Investors have earned twice as much by leaving cash offshore in a 5 per cent
interest fixed bond.
London’s FTSE 100 is still struggling to pass its 2000 high.
Property prices in London make nonsense of those in Nicosia. Personal debt in the UK is three times what it is here.
Taxes on property sales here are five times UK taxes, all good news for our Treasury.
How many times did sterling devalue under Chancellor Dennis Healey in the late 60s while inflation hit 29 per cent
per annum? Property values didn’t simply rise, they soared through the roof. Nobody compared Britain to Thailand,
Lesotho or Bulgaria then.
In 1981, I had cash sitting in Crédit Lyonnais awaiting completion of the purchase of French property. I was offered
26 per cent per annum interest if I left the money on deposit; it was at the time a socialist Mitterrand took over
power from le roi Giscard and the fearful wealthy were rushing suitcase loads of the stuff over the Swiss border.
The franc fell from 11 to 14 to the pound sterling. Devaluation always follows currency speculation; they go hand in
glove.
But our president seems impregnable; our developers carry on constructing, knowing it’ll only cost us more tomorrow,
it’s good housing stock whether we sell it today or later, the banks can wait for return of loans, after all,
they’ve got little else to do if Mr Hunter is to be believed; they’re receiving interest like Britain’s innumerable
Building Societies, and that’s all that matters surely?
Economics is an impure science and I am not an economist; barrack room ones like me are rife in our coffee shops!
The local press has a responsibility to its readership, easily influenced by doom laden, seemingly incontrovertible
economic arguments, our money and the potential loss of it being newsworthy. And taking some of the Mail’s recent
correspondents seriously gives me the jitters and would have me rushing to convert my Cyprus pounds into euros well
ahead of entry in 2008.
But I recall how another of my excellent cousins rushed his loads of cash over to Greece in anticipation of an
immediate devaluation of our pound two years ago, when it was mooted that we were to join the EMU. Not only did he
get his fingers burnt on the way out, but re-sautéed on his way back after our currency actually strengthened. Mind
you, he only managed a 2/1 in economics at the LSE, even though he is reported to have had a whale of a time there.
Why risk losing several per cent by precipitous conversion when our banks will do it for free on the first of
January next year?
Now if only we could survey future movements of our politician’s funds held in their many different bank accounts…
As soon as they begin moving their stash, we can join in and avoid our hard earned deposits disappearing during Mr
Hunter’s predicted collapse of our indigenous banks along with the second imminent crash of the Cyprus Stock
Exchange due to a bankrupt property market.
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