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Cyprus to adopt the Euro
Cyprus is preparing for one of the most important changes in its history. On 1 January 2008 Cyprus will adopt the euro, the single European currency. More than 310 million people in the 13 EU member states that have adopted the euro now share the benefits of the single currency.
The adoption of the euro will bring considerable benefits to Cyprus. Price transparency in the single market of the EU facilitates price comparability, fosters competition and leads to lower prices. The elimination of the exchange rate risk is conducive to trade transactions, thus also leading to lower prices. Travelling and buying goods and services in the euro area countries is easier, because citizens will not have the hassle of changing currencies every time they cross a border, and are better able to compare prices since they can use their own currency anywhere in the euro area. Travelling and buying goods and services outside the euro area is also easier, since the euro is an international currency and therefore widely accepted in many places outside the euro area, particularly in tourist destinations. Furthermore, both savers and investors can take advantage of increased opportunities for savings and investment, which emerge in the single financial market of the EU.
The conversion rate is set at 0,585274 Cyprus pounds to the euro, which corresponds to the current central rate within the Exchange Rate Mechanism. If you are sending funds to Cyprus after 1st January 2008 you should calculate for Euros. Forward contracts are a good way of budgeting for your house purchase and means you can keep the majority of your funds in the UK earning interest and taking the exchange rate fluctuations out of the equation.
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