Bulgaria Ski discussion board

The only thing with the Lev is that they have linked the lev to the Euro just as the UK did back in the early 90's so they modulate the bank base rate to sustain the link - however we all know what happened in the UK when interest rates were changed purely to sustain pound strength. The same could happen to the Lev (or any currency attempting to hold to a certain level).

Flip side you can have rampant inflation due to too low interest rates or exceptionally high cost of debt which again can kill the economy. Its a hard thing to manage more so given the current economic situation.

The way the leva is pegged to the Euro is much different to how the pound was pegged to the ECU under the ERM 20 odd years ago. But for current purposes the exchange rate is falling because the base rate has been lowered to reduce the cost of money for UK businesses & individuals to help them through the recession. Despite the Eurozone and America also lowering rates, the perception is that the UK will be hit harder, which reduces the exchange rate further. Couple with which, the country has a high external borrowing rate which means it'll have to sell more pounds overseas and further depress the price of pounds. The only slightly bright point for those wanting to travel overseas is that the Eurozone has just officially entered recession and this might depress the value of the euro relative to the pound - ie the rate gets better. Of course, if you're an exporting company or you get paid in Euro and your expenses are in sterling, its happy days again.