Prospect of Euro, ECB Aid to save Spain boosts the euro;
Euro, ECB Aid
Welcome to the Pure FX account of this month’s changes in the euro exchange rate.
This is intended as a brief guide to movements in the euro, to put you in the best position for when you exchange currencies for your Cyprus property.
Exchange rate changes:
UK pound to euro (GBPEUR):
1.2811 on July 30th.
1.2598 on August 29th.
What affected the exchange rate this month
The Euro made significant gains against the pound this month, chiefly on expectations that the ECB will soon intervene to (potentially) end the debt crisis Euro, ECB Aid. Prospect of Euro, ECB Aid to save Spain boosts the euro
Speaking at the beginning of August, ECB president Mario Draghi said he would do “whatever it takes to preserve the euro.” Since then, it has emerged he plans to buy Spanish and Italian government bonds, making it cheaper for these countries to borrow, and thus reducing the intense financial pressure they feel while they reform their economies.
If the central bank does intervene, it could remove one of the chief anxieties about Europe’s debt crisis i.e. doubts about the lengths to which the region’s richer countries will go to aid indebted Spain and Italy. Hence, for the moment, the rising euro.
What will happen next to the rates
Crucially, these current gains in the euro exchange rates are based on little more than speculation. The European Central Bank has yet to release substantial details about its plan to buy Spanish and Italian debts, meaning the scheme could (potentially) turn out to be a damp squib.
Paul McNamara at investment management firm GAM for instance notes: “Prices are only where they are now because there is a very material expectation priced in that the ECB will intervene.”
Hence if it turns out otherwise, this euro strength could quite easily become a castle built on sand. If the ECB disappoints, look out for the euro sinking in the not-too-distant future.
How this affects your foreign exchange transfers
If you’re in Cyprus, a strong euro is useful if you plan to repatriate funds to the UK. It after all means that, when you sell euros to buy sterling, you get more pounds in the process.
If on the other hand you plan to buy property in Cyprus, keep an eye on the euro exchange rate. If the European Central Bank disappoints, as is quite possible, we can expect the pound to firm up against the common currency quite shortly.
Get in touch
I do hope this post has been useful to you.
We will return with our next foreign exchange update next month. In the meantime, if you’d like to discuss transferring money to Cyprus, visit us at foreign exchange specialist Pure FX. You can also call +44 (0) 1494 671800 or email enquiries(@)purefx.co.uk. We’d be delighted to help with your enquiry.
Euro, ECB AId
Mobile Roaming costs
EU mobile roaming costs are to fall substantially – hopefully the last regulation in this field.
From 1 July on, the tariffs for mobile roaming costs within the European Union will substantially decrease in the next two years. Liberals and Democrats in the European Parliament are generally satisfied with this and other results of todays plenary vote on the future of roaming for both the wholesale and the retail sector. The vote sealed the trilogue agreement settled between Commission, Council and Parliament in late March.
Probably the most significant step forward for consumers in this Roaming 3 regulation is the low cap on the roaming costs for data – from no caps on the costs per Megabyte so far to 0.70 EUR on 1 July this year and 0.20 EUR in 2014.
Adina VALEAN (Romania, PNL), who is the ALDE rapporteur on Roaming 3 and who was the EP rapporteur on Roaming 2, said after the final negotiation: “I welcome the agreement as we will continue to drag themobile roaming costs down. By introducing the structural measures allowing for decoupling the roaming services from the domestic services, competition in roaming prices should increase. This will hopefully provide customers with better services at a lower price, but without price intervention and in a market-based approach.”
Jens ROHDE (Denmark, Venstre) who is the ALDE coordinator at the Committee on Industry, Research and Energy, added: “Of course as liberals we can always ask ourselves why we continue to regulate prices. But we need to keep the history in mind. The first roaming regulation was a result of a strong suspicion of price cartels but with insufficient proof we had to approach it the other way around. This lack of competition and excessive prices continues to be a problem. Therefore, the regulation will introduce both lower maximum tariffs and structural measures to increase competition. In general, we hope the new competition elements will make further price regulation obsolete in the future.”
mobile roaming costs
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Cyprus Vat to rise
VAT in Cyprus will rise to 17% from March 1st 2012
According to the Finance Ministry’s V.A.T Service, the increase – part of the government’s efforts to fill state coffers and combat the economic crisis- will not affect products and services where VAT is set at a reduced rate of 5% or 8%.
For Property Buyers:
a] The applicant must be a permanent resident of Cyprus before signing the Sales Agreement.
b] The Sales Agreement is signed with 17% VAT included. A provision is added that if / when the Purchaser obtains approval from the Vat people, he will provide the Vendor with the approval and the Vendor will claim the difference back from the VAT (form 4B) if he has already paid it to the Authorities (VAT payable every 3 months).
After the approval, every other payment shall bear 5%. When the Vendor receives the return from the VAT, he either pays it back to the Purchaser or gives him a credit note.
c] In case of an under construction property, the water and electricity bills must be sent to the VAT within 6 months after the delivery of the property to the Purchaser.
Therefore an E.U. citizen who is not a permanent resident of Cyprus cannot get this benefit unless he first comes to Cyprus, becomes a permanent resident and after 2 years buys a property.