Effect of London 2012 Olympics on Currency Prices
Hosting the 2012 Olympic Games cost the British government an estimated £9.3 billion. While this may seem like an exorbitant amount, history has shown that hosting the Olympics can not only be a matter of prestige for a city, but also stimulate local economies and boost tourism, thus providing long term economic benefits.
British Olympic medal’s impact on cash reserves
The 2012 London Olympics have provided much needed cash reserves to the beleaguered British economy, which announced earlier in July that GDP output fell by 0.7 percent in the second quarter of the year. The games have been very successful, thanks in part to the British team’s exceptional performance.
Olympics boosting a nation’s currency?
As a major global event, the Olympics have traditionally boosted the hosting nation’s currency. Since the London Olympics were a known event scheduled years in advance, current prices of major currencies reflect this anticipation. But as Bank of England Governor warned, the Olympics alone won’t help the British and the global economies rise out of economic recession.
Currencies after London 2012 Olympics
Current currency prices reflect this charge. The GBP has risen very marginally against the dollar in the last one week, going from 1.55 USD to 1.568 USD per GBP. The woeful state of the European economy has caused the Euro to fare much worse, with prices falling from 1.241 USD per Euro to 1.23 USD (though the end of the games did provide a small boost).
EUR rising against GBP
Such is the state of the global economy that even arguably the most successful Olympic games ever have failed the rouse the major currencies from their slumber. A day after the Games ended on Sunday, all the major currencies are down, with only the Euro rising marginally against the GBP (up 0.054 percent to 1.2715 GBP per Euro).
Greek economy continue shrunking
Even as the Olympics drew to a close, the Greek economy shrunk a further 6.2 percent in the second quarter, reaffirming fears of global recession. As successful as the games might have been, it is clear that the slide in European currency prices will continue as the continent grapples with debt. The Pound Sterling is holding off much stronger than other currencies because of the London Olympics, but it remains to be seen how long the effect might last.
