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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum

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Nov 28 4:00 PM EST

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To: Haim R. Branisteanu who wrote (84631)	12/19/2011 6:20:11 AM
From: elmatador	Read Replies (1) of 218083

Graphic: How exchange rates could collapse after a Euro break-up Forecasting the effects on exchange rates of a break-up of the Euro and what it would mean for new national economies has been attempted by economists at ING and Nomura. Their studies collated the relative worth of potential new currencies five years after a theoretical collapse of the Euro. Our charts* show ING's forecast for 2012 based on their assumption of a dollar to sterling rate of 1.42. For 2016 the chart shows the average of their forecasts, converted to ING's guess of a dollar to sterling rate of 1.5. *see chart: telegraph.co.uk ING sees an immediate fall in currencies in 2012, which is shown in the red bars, and a recovery over the four years running up to 2016. ING predicts that most of the new currencies will not reach Euro exchange rates, except for Germany which would see its currency appreciate by four per cent. The weakest nations inside the Eurozone would rapidly devalue against sterling by 2016, with a new Greek drachma worth at least 44 per cent less against sterling by 2016, the Portugese escudo worth 28 per cent less and the Spanish peseta worth nearly 24 per cent less. Both forecasters believe it would be a far from smooth ride if the Euro collapsed. There would be enormous uncertainty after a possible Euro collapse, with currencies liable to overshoot and be subject to high volatility. In ING's complete break-up scenario, governments decide to convert all assets and liabilities into their new national currencies. Capital controls like transaction taxes are temporarily introduced in an effort to stop money leaving weaker members. New notes and coins are introduced as quickly as possible, but in the transition Euro notes would likely be stamped to mark them as the new national currencies, and strict legal tender limits would be put on coins. In the Eurozone ING sees GDP output falls ranging from seven per cent in Germany to 13 per cent in Greece. The Nomura team base their analysis on current real exchange rate misalignments and possible future inflation risk.

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