Exchange Rate

Exchange rate is defined as the rate at which one currency may be converted into another. The exchange rate is used when simply converting one currency to another (such as for the purposes of travel to another country), or for engaging in speculation or trading in the foreign exchange market. There are a wide variety of factors which influence the exchange rate, such as interest rates, inflation, and the state of politics and the economy in each country.

 

My last article was written on the topic of recession. During a recession, a significant decline in economic activity spreads across the economy and can last from a few months to more than a year. The article I found relative to this topic was about the recession in Greece. What I failed to mention is that Greece is not the only Europe country currently experiencing an economic crisis.

 

Cyprus is currently trying to save its banks from collapse,and claims that they are facing deep recession. Yesterday morning, (March, 25, 2013) in order to keep Cyprus in the euro zone, and restore the promise to protect bank deposits, they received a $13 billion bail-out package. (10 million in Euros) Cyprus is the fourth euro-zone country to receive a full bail-out. Greece, Ireland, and Portugal were prior.

 

According to the article Pound Euro Exchange Rate Rises After Cyprus Deal; Sterling Fails To Break Resistance Level Vs Dollar that was published this morning at 9 AM, after the Cyprus deal was made, the Euro still struggled to sustain any gains against the U.S Dollar and made widespread losses versus the majority of the major currencies. This deal has put the Euro under additional selling pressure. There was said to have been an initial sense of relief that the Cyprus deal would probably prevent an immediate collapse of the entire banking sector, but that was short-lived throughout the day. Shares in European banking sector stocks suffered a major decline.

 

It looks as if the Euro-area recession is steady declining while unemployment rises. It saddens me to see this financial crisis take place. The U.S is definitely not in an economically good place either, but the recent news articles I have read make it seem like Europe is during ten times worse.