Cyprus fallout: what now for buyers in Europe?

Tuesday, March 26, 2013

Cyprus fallout: what now for buyers in Europe?

Anyone on the cusp of buying a holiday home in the eurozone can be forgiven for feeling a bit wary about where they are putting their money right now.

Although the immediate crisis in Cyprus has receded – on a macro level; the banks still haven't opened at time of writing – general uncertainty about the euro continues.

Let's start with the good news: in the past ten days we have seen sterling gain over 3.5 per cent against the euro, its strongest performance since late January and one of its sharpest rises in over a year.

“We have got a lot of relieved customers at the moment,” says Charles Murray, senior broker at currency broker, FC Exchange.

“Many people have been waiting to see what's going to happen in Cyprus. Now we are thinking, is the pound likely to go to 1.20? But who knows? At this moment it is 1.18 and we are seeing a growing amount of people taking advantage of this sudden hike in sterling versus versus the euro as uncertainty prevails, so an opportune time for the UK to reclaim its safe haven status as long as recessional fears remain at bay.

“Some clients are choosing to purchase forward contracts, so they can lock their funds at 1.18 – and protect against any fall.

“We are also seeing a lot of clients bringing money back to the UK.”

And here comes the less positive side.

“Although the crisis there is far from over, we are starting to see contagion spread around the eurozone, as spooked investors anxious about the repercussions of the Cypriot banking saga anticipate a pandemic for the banks in other European countries, specifically Spain and Italy,” adds Charles.

“With this so-called 'choice' of remedy hitting larger Cyprus' bank depositors pockets hard, it is easy to see why investors are withdrawing funds from many of Europe's stricken banks and seeking the safety of the more favoured US dollar and pound.”

Yesterday, Cypriot Finance Minister, Michael Sarris, played down speculation that Cyprus was on the way to a euro exit, but did warn that a deepening recession was following the bailout.

But what does Charles advise prospective buyers still keen on buying is Spain or Italy?

“Spread your risk if you need to park money in the eurozone. Divide your funds between three or four of the large banks: HSBC seems to be inspire confidence at the moment.

“Don't keep any more than you have to exposed in foreign banks – transferring small, regular chunks [for paying bills locally] rather than one large deposit.”

If you would like Charles to expand on the above and the outlook for sterling v euro or the USD going forward please call him on 020 7 989 0000, or check out the

In the meantime if you'd like to take advantage of plenty more expert advice with a view to buying abroad, all under one roof, you can get two tickets for our Olympia show (12-14th April) for £15 here.


A Place In The Sun