The Currency of Cyprus - Introducing the Euro
On January 1st 2008, the Euro was adopted as the currency of Cyprus, replacing the Cyprus Pound after nearly forty-eight years. The final exchange rate from Cyprus Pound to Euro was set at €1.70860 per C£1 back at the middle of 2007.
The Currency of Cyprus has changed
Given the fact that, at this stage, Sterling is quite weak against the Euro, the average investor's view of property in Cyprus has changed somewhat, with an increasing number of buyers carefully considering the investment potential of each area before deciding where to buy.
For the first year after adoption, all prices in the Republic will still be displayed in both currencies, so as to ease the change-over for the local population.
Furthermore, most retail outlets, bars and restaurants have been displaying conversion charts since the beginning of September 2007, so as to aid customers in converting purchase values from into the old to the new currency of Cyprus.
Search our database for properties whilst exchange rates are low.
As previously stated, the Euro was officially adopted as from January 1st 2008 with an overlap period of one month, during which time both currencies are accepted by all outlets. After this time, the Euro is set to become to only legal currency in the Republic of Cyprus and any leftover Cyprus Pounds may only be exchanged at banks (Banknotes until 2017, Coins until 2009).
Speaking of banks; all bank balances were automatically converted to Euros on January 1st and, since the Pound Sterling still remains outside the Euro-Zone, it is still possible to open Sterling bank accounts in Cyprus now that the conversion to the Euro has been completed.
There are a few other considerations to the Euro’s adoption as the currency of Cyprus:
Since Euro interest rates are lower still than their Cyprus pound equivalents, borrowers can expect to benefit from the conversion, whilst savers may experience a drop in interest of up to 20% once interest rates have been brought fully into line.
With the conversion completed, it has become far easier for prospective buyers to gauge relative real estate prices in comparison with traditional property hotspots such as Spain and France. Furthermore, any risk of exchange rate fluctuations is greatly reduced due to the Euro’s governing influence and overall stability.
Although there are many rumours that Cyprus will be ‘Rounding Down’ following the conversion to the Euro as its official currency, past trends for countries adopting the Euro to simply ‘Round Up’, thus achieving instant price rises and leaving the consumer effectively out of pocket, must be taken into account when planning the purchase of things such as fixtures and fittings for any new property.
At this stage, only time will tell.
VAT on Land
The introduction of the Euro as the official currency of Cyprus will also see the introduction of 15% VAT on land purchases. Whilst not as such directly connected to the Republic joining the Eurozone, this certainly became one of the main considerations for any prospective property buyer during the latter stages of 2007.
All in all, the change-over to the Euro presents prospective buyers of properties in Cyprus with an ideal window of opportunity to take advantage of lower interest rates and the more up-to-date mortgage and financial packages which will invariably follow in the Euro's wake.
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