2. * INTRODUCTION
* ESTABLISHMENT
Euro Zone was formed on 1st Jan,1999
Euro was adopted as common currency by the
members of Euro Zone in 2002
* ADVANTAGES OF ADOPTING COMMON
CURRENCY
• Increases competition
• cost of exchanging currency decreases
• Exchange Rate Risk reduces
• Boosts Trade
*
3. * CRITERIA FOR JOINING EURO ZONE
LOW INFLATION RATE
GOVERNMENT FINANCE
EXCHANGE RATE
LOW LONG TERM INTEREST RATES
4. *17 STATES OF EUROPEAN UNION ARE IN
THE EUROZONE
Austria, Belgium, Cyprus, Estonia, Finland,
France, Germany, Greece, Ireland, Italy,
Malta, Netherlands, Luxembourg, Slovakia,
Portugal, Spain and Slovenia
*
5. *NON MEMBER USAGE OF EURO
Monaco, San Marino, and Vatican City
* EXPULSION AND SECESSION
* ADMINISTRATION AND REPRESENTATION
13. * USA
* JAPAN
* CHINA
* RUSSIA
* BRAZIL
* IMPACT ON SUB-SAHARAN AFRICA
* IMPACT ON NORTH AFRICA AND MIDDLE EAST
*
14. * DROP IN TRADE FINANCE
* BANKS ARE BECOMING INCREASINGLY
RELUCTANT
* TRADE FINANCE VOLUME FELL TO $26.8BN
* NEW BANKING RULES
*
15. COUNTRY CURRENT LONG TERM RATING PREVIOUS LONG TERM RATING
2 Notches Down
Cyprus BB+ BBB
Italy BBB+ A
Portugal BB BBB-
Spain A AA-
1 Notch Down
Austria AA+ AAA
France AA+ AAA
Malta A- A
Slovakia A A+
Slovenia A+ AA-
*
16. * US DOLLAR HAS RISEN
1 JAN. 2010 1£ = 1.43$
29 SEPT. 2012 1£= 1.2857$
* LESS EXPORT
* US EXPORTS FELL FROM 15% TO 11%.
* TRADE DEFICIT INCREASED TO $52.7 bn.
* BANKS NOT ABLE TO REPAY
*
17. * 1 JAN. 2010 1£ = ¥133.256
29 SEPT. 2012 1£ = ¥100.2828
* JAPAN’S ECONOMY HIT BY TSUNAMI, AN
EARTHQUAKE AND NUCLEAR DISASTER
* JAPAN HAS A HUGE DEBT $12.19 TRILLION
* TRADE FELL BY 207%
* INVESTORS STILL INTERESTED
*
18. * RUSSIA’S ECONOMY GREW 4% IN 2010 AND 4.1%
IN 2011
* HOWEVER FOREIGN INVESTMENTS REDUCED
* ECONOMY GREW BECAUSE OF HIGH OIL PRICES
$61.80 to $104 FROM 2009 TO 2011
*
19. * 1/5TH OF CHINA’s EXPORTS GO TO EUROPE
* CHINESE YUAN INCRESED BY 23% AGAINST THE
EURO
* EXPORTS FELL TO 15.2%
*
20. * ECONOMIC GROWTH DECLINED FROM 7.5% IN
2010 TO 2.7% IN 2011
* 43% INCREASE EXPORTS TO CHINA
* 17 % EXPORTS GO TO CHINA
*
21. * COUNTRIES SUCH AS ETHIOPIA, KENYA, AND
GHANA WERE PROTECTED
* SOUTH AFRICA, BOTSWANA, AND SWAZI FELL
FROM 3.5% IN 2010 TO 3.1% IN 2011
* LESS SHARE AS EXPORTS DECREASED FROM 40%
IN 2002 TO LESS THAN 25% AT THE END OF 2010
*
22. * TUNISIA (80%), MOROCCO (65%), AND EGYPT
(40%) EXPORTS 80%, 65%, AND 40% OF THEIR
MANUFACTURED GOODS
* CRISIS SLOW ECONOMIC GROWTH AND REDUCE
GLOBAL DEMAND FOR OIL
*
23. * IMPACT OF CRISIS ON INDIA
1. Share of Indian exports as compared to the
advanced economies is decreased drastically.
*
28. 6. Impact on Foreign Institutional Investment(FII)
29. 7. Exchange Rate Depreciation(ERD)
Since the global uncertainties aggravated, the Indian exchange
rate has depreciated (12.1%) against the Euro during the
current financial year.
The depreciating rupee adds further pressure on domestic
inflation and India’s import bills.
30. * PUBLIC EXPENDITURE
* FISCAL POLICIES AND MONETARY POLICIES
* FOREIGN INVESTORS
* HOME INVESTORS
*