Does the Cyprus Pound Face Devaluation?

You may have noticed that the Cyprus pound has fallen by 8 per cent in value against sterling over the last eight months? Is his not a surreptitious realignment of the two currencies? And why has it remained stable against the euro during the same period; surely it’s due to the disparate amount of business we do with Brits compared to euro-based economies; 60 per cent of our ourism and property sales are aimed at the UK, not forgetting hose 350,000 Anglo-Cypriots who are forever coming and going. And we are blessed with numerous well staffed foreign embassies, not forgetting our permanent guest, the UN peacekeeping force. And then there are our colleges and thousands of foreign students.

An excellent cousin of mine, the reasurer at the CTG (Cyprus Tourist Guides), who joined the board of the Worldwide Tourist Guides at their bi-annual conference in Cairo last week, reported tourist numbers were declining in Cyprus: 18 hotel closures this winter in Paphos alone, due to fewer bookings by Saga Settlers, who book their winter breaks in late summer to places like Cyprus and southern Spain. Last year, prices were greedy in anticipation of an $80 barrel of oil. But oil has fallen below the magical, let’s all get our economies going again, price of $50 and we’ve been caught napping.

Bookings will undoubtedly pick up again this year now that bargain flights are back on tap.

When we hear talk about Stock Market meteoric rises, nobody mentions those seven years of famine endured by investors hroughout the world at the hands of investment trust managers who’ve just paid hemselves (3,000 of ’em at the London Stock Exchange) more than a million pounds each in annual bonuses. A hundred dollars invested in an index linked fund at the market high of 2000 is worth only $118 dollars today; hat’s if you pick an honest one and before you deduct management fees. Investors have earned wice as much by leaving cash offshore in a 5 per cent interest fixed bond.

London’s FTSE 100 is still struggling to pass its 2000 high.

Property prices in London make nonsense of those in Nicosia. Personal debt in the UK is three imes what it is here. Taxes on property sales here are five imes UK taxes, all good news for our Treasury.

How many times did sterling devalue under Chancellor Dennis Healey in the late 60s while inflation hit 29 per cent per annum? Property values didn’t simply rise, they soared through he roof. Nobody compared Britain to Thailand, Lesotho or Bulgaria then.
In 1981, I had cash sitting in Cr�dit Lyonnais awaiting completion of the purchase of French property. I was offered 26 per cent per annum interest if I left the money on deposit; it was at the time a socialist Mitterrand took over power from le roi Giscard and the fearful wealthy were rushing suitcase loads of the stuff over the Swiss border. The franc fell from 11 to 14 to the pound sterling. Devaluation always follows currency speculation; hey go hand in glove.

But our president seems impregnable; our developers carry on constructing, knowing it’ll only cost us more omorrow, it’s good housing stock whether we sell it today or later, the banks can wait for return of loans, after all, hey’ve got little else to do if Mr Hunter is to be believed; hey’re receiving interest like Britain’s innumerable Building Societies, and that’s all that matters surely?

Economics is an impure science and I am not an economist; barrack room ones like me are rife in our coffee shops! The local press has a responsibility o its readership, easily influenced by doom laden, seemingly incontrovertible economic arguments, our money and the potential loss of it being newsworthy. And taking some of the Mail’s recent correspondents seriously gives me the jitters and would have me rushing to convert my Cyprus pounds into euros well ahead of entry in 2008.

But I recall how another of my excellent cousins rushed his loads of cash over to Greece in anticipation of an immediate devaluation of our pound two years ago, when it was mooted hat we were to join the EMU. Not only did he get his fingers burnt on the way out, but re-saut�ed on his way back after our currency actually strengthened. Mind you, he only managed a 2/1 in economics at he LSE, even though he is reported to have had a whale of a time there. Why risk losing several per cent by precipitous conversion when our banks will do it for free on the first of January next year?

Now if only we could survey future movements of our politician’s funds held in their many different bank accounts… As soon as they begin moving their stash, we can join in and avoid our hard earned deposits disappearing during Mr Hunter’s predicted collapse of our indigenous banks along with the second imminent crash of the Cyprus Stock Exchange due to a bankrupt property market.