Eurozone's ills spread to neighbors
Investors pushed the euro up from recent lows, but for many other currencies some of the damage may have already been done. Alisa Roth reports.
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Kai Ryssdal: We've been telling you for the past few days about the debt problems a couple of European countries are having -- Greece, Spain, Ireland and Italy as well. And how what's bad over there could eventually wind up being bad over here. It's a little bit -- if you think about it -- like a fiscal swine flu in that it's not a question of whether we get infected but when. And how bad it's going to be.
Thanks to the world's currency exchanges and the fact that most of Europe is already on a single currency, some of the damage may have already been done. Marketplace's Alisa Roth reports now from New York.
ALISA ROTH: When Europe first ditched individual currencies like the Deutschmark and the Spanish peseta for the euro, a lot of investors thought it would be a safe alternative to the dollar.
Now, though, with eurozone countries like Greece and Spain looking a little peaked, investors are getting queasy. And they've been rushing to sell their euros.
Some European neighbors, like the U.K. and Switzerland, opted to keep their own currencies. But this latest crisis suggests they're still susceptible to the eurozone's ills.
MARC CHANDLER: They're affected geographically, they're affected by trade ties, they're affected by familiarity.
Marc Chandler is a currency strategist at Brown Brothers Harriman. He says those countries may have separate currencies. But they still move in the euro's orbit.
CHANDLER: They tend to move like birds in a flock, or a school of fish. They tend to move in the same direction, but in different speeds.
But it's not just proximity to the eurozone that's dragging some of these currencies down.
Johs Worsoe is in charge of foreign exchange at Union Bank. He says the U.K., for example, has big problems of its own.
JOHS WORSOE: Structurally, the U.K. has some issues that they're working their way through some big deficits. And so I think some investors are a little cautious with the U.K.
Investors who are worried about currency contagion have been backing away from the eurozone and investing in the Japanese yen and the U.S. dollar.
But traders like Worsoe say this isn't the end of the euro.
Today Germany said it's working on a plan with the rest of Europe to guarantee debts in countries like Greece and Spain. That could reassure investors and help the euro recover.
In New York, I'm Alisa Roth for Marketplace.
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