Impact of Greek Financial Crisis on the Value of Euro with the Other Major World Currencies

  • Dr S Gautami Associate Professor, Department of Management Studies, Sri Venkateswara College of Engineering, Tirupati, INDIA
Keywords: EUROZONE, Bailout Package, Future Spot Exchange Rates, Currency Futures Rates

Abstract

During the Greek Financial Crisis period (December 2009), Greece, one of the members of the EUROZONE, faced an unprecedented financial crisis which triggered gradual erosion in the value of EURO with respect to major world currencies during this period. During May 2010, the European Union agreed for a bailout package for Greece which was intended to prevent a further decline in the value of Euro.

This study mainly focuses on the trend in the Exchange rate of Euro against the world’s major currencies during the period of Greek financial crisis and the predictability of Future spot exchange rates using the currency Futures rates. It has been noted that on an average the variation between Future spot rate and Currency futures rates has been highest in respect of INR/EURO and the lowest in respect of GBP/EURO. This indicates that the predictability of GBP/EURO futures rate as an indicator of future spot price has been the highest.

Further, it has been found that the depreciation in the EURO exchange rate during the Greek financial crisis has been the highest against INR and lowest against GBP. This has been further confirmed by the fact that the Regression Coefficient of GBP/EURO has been the lowest while that of INR/EURO has been the highest.

Downloads

Download data is not yet available.

References

Krugman, Paul. (2012). European crisis realities, The conscience of a liberal blog (New York Times). Available at: http://krugman.blogs.nytimes.com/2012/02/25/european-crisis-realities/.

Kalemli-Ozcan, Sebnem, Elias Papaioannou, & Jose Luis Peydro. (2010). What lies beneath the Euro’s effect on financial integration? Currency risk, legal harmonization, or trade?. Journal of International Economics, 81(1), 75-88.

Fernandez-Villaverde, Jesus, Luis Garicano, & Tano Santos. (2013). Political credit cycles: The case of the Eurozone. Journal of Economic Perspectives, 27(3), 145-166.

Blanchard, Olivier & Francesco Giavazzi. (2002). Current account deficits in the euro area. Brookings Papers on Economic Activity, 2, 147-209.

Wolf, Martin. (2011). Merkozy failed to save the Eurozone. Financial Times.

Arkolakis, Costas, Aristos Doxiadis, & Manolis Galenianos. (2014). Greece’s trade adjustment: Difficulties and implications.

Doxiadis, Aristos. (2011). Shifting to tradables.

European Commission, Single Financial Market. Available at: http://ec.europa.eu/economy_finance/euro/why/single_market/index_en.htm.

Gross, Daniel. (2014). What makes greece special, The project syndicate. Available at: http://www.project-syndicate.org/commentary/daniel-gros-asks-why-the-greekeconomy-remains-mired-in-recession.

Lane, Philip R. (2013). Capital flows in the euro area. European Economy Economic Paper No. 497.

Papademos, Lucas Opening address: The Greek economy: performance and policy challenges, in Greece’s economic performance and prospects, Edited by Ralph.

C. Bryant, Nicholas C. Garganas, & George S. (2001). Tavlas, brookings bank of Greece and the brookings institution, xxxiii-xxxix.

Rehn, Olli. (2013). Turning Germany’s surplus into a win-win for the Eurozone. Available at: http://www.faz.net/aktuell/wirtschaft/gastbeitrag-was-handelsueberschuesse-mitdem-euro-zu-tun-haben-12657154.html.

World Bank, The Worldwide Governance Indicators Project. Available at: http://info.worldbank.org/governance/wgi/index.aspx.

Barry Eichengreen - The euro: love it or leave it?.

Carmen M. Reinhart - Eight hundred years of financial folly.

Paul De Grauwe - Greece: The start of a systemic crisis of the Eurozone? Business line newspapers. Available at: www.exchangerates.org.uk/.

https://www.thebalance.com/what-is-the-greece-debt-crisis-3305525.

Euro Summit. The Wall Street Journal.

The New York Times. "From Lithuania, a View of Austerity’s Costs.

British Broadcasting Company. "Greece Profile – Timeline.

Reuters. "Greek Prime Minister Tsipras Announces Bailout Referendum”.

Charles Wyplosz - Bailouts: the next step up?.

Published
2021-08-07
How to Cite
Dr S Gautami. (2021). Impact of Greek Financial Crisis on the Value of Euro with the Other Major World Currencies. International Journal of Engineering and Management Research, 11(4), 109-114. https://doi.org/10.31033/ijemr.11.4.14