Do you plan to visit Vienna? Can’t wait to see the Hofburg Imperial Palace, or the Ringstrasse? Then, before you go, there’s the important matter of changing currencies. Because, unless you’re already in the Eurozone, you’ll have to change whatever currency you use at home to euros before you arrive. US dollars won’t take you too far in Wien (as the city is known by the locals!)
Given that, when’s the best time to buy your euros? What’s set to influence the euro exchange rate or the Vienna Exchange Rate? In this post, I want to look at 5 things set to rock the euro in the coming weeks. If you plan to visit Vienna soon, these could help you determine when the euro is weakest (and therefore, when you’re more likely to get the highest common currency total!)
What could weaken the euro?
It won’t effect your Vienna holiday, but the fact that the Eurozone has just entered recession could have a positive impact on your euro and Vienna exchange rate. This is because, the dimmer the view investors take of prospects on the continent, the less inclined they are to buy the euro. That means the currency is less in demand and, just like any other product, the less in demand it is, the lower its price.
The US fiscal cliff
It might seem odd that the United States’ $600bn dollar fiscal cliff could actually see the euro fall, as opposed to the US dollar. It is, after all, a US problem. But in fact, if you intend to buy the common currency, the fiscal cliff is to your advantage, as it encourages investors to turn from the continent to the relative safety of the US. That then makes the euro weak.
Greece’s debt crisis
In addition, the continuing debt crisis in Greece could also see the euro decline. This is because, though Greece has been bailed out twice in the last 18 months, it looks set to need more cash to avoid bankruptcy. That of course calls into question its future in the Eurozone. And if the markets aren’t sure Greece will be in the euro in six months, they sell the common currency.
What could strengthen the euro?
A closer fiscal union
If the Eurozone sorts out its internal politics to create a sustainable, plausible fiscal union among its seventeen members, that could see the euro rise in the next six weeks. Fortunately if you plan to visit Vienna, the members of the Eurozone have been fumbling with this topic for three years now, and are little closer to a lasting solution.
Spain requests a state bailout
Second, the euro could also rise if Spain requests a Eurozone bailout. This is because it would put an end to continuing questions about how Spain plans to fund itself in 2013, when its banking sector is close to collapse. Fortunately if you’re visiting Vienna though, the Spaniards are a proud bunch, and unlikely to request help until the last possible moment.
How can you use the Vienna exchange rate information?
How can you use this information? Well, if you read about any of the first three things in the news, it probably means the euro is weakening. That then means you can get a better euro exchange rate! If you see the bottom two however, it could mean the euro is on the rise, and you’re better off buying your common currency as soon as possible, before it strengthens too much.
This is a guest post by economic commentator Peter Lavelle. If you’d like to find out how to maximise your euro exchange rate, and receive a free quote, visit him at foreign exchange specialist Pure FX.
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