Currency exchange news: Interest rate control could cause difficulties

Currency exchange rates for the euro may prove of particular interest to the UK as the possibility of joining the single currency remains under debate.

Andrew Goodwin, senior economist with Oxford Economics, has suggested that the UK could come into difficulties concerning the central bank's interest rate, if the country were to join the eurozone.

"The main issue is the loss of control over interest rate policy," he said.

"Over the decade that the eurozone has been in existence, interest rates have been too low for countries like Spain and Ireland, where large asset price bubbles built up, while they were arguably too high for other countries in northern Europe where growth was slow."

However, last week a survey of leading business figures conducted by the UK revealed that just one of the eight people questioned was not in favour of the UK joining the euro in the foreseeable future.

Click here to see how much you can save with HiFX's Foreign Exchange services

Posted by Eleanor Ward