The euro is holding strong.

Photographer: PATRICK KOVARIK/AFP/Getty Images

One Thing Europe Got Right in Greece's Crisis

Mark Gilbert is a Bloomberg View columnist and writes editorials on economics, finance and politics. He was London bureau chief for Bloomberg News and is the author of “Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable.”
Read More.
a | A

Greece's slow-motion economic car crash is an ongoing debacle, but Europe's success at ring-fencing the disaster has been remarkable. Judging from the currency market, the threat of contagion in Europe has steadily diminished month by month since March.

Greece's Fiscal Odyssey

Here's a chart showing the monthly swings in the euro's value against the dollar this year. Those trading ranges have become narrower and narrower, suggesting euro traders have decided they couldn't care less whether Greece exits the common currency project or not:

Source: Bloomberg

January's high-to-low swing of 8.8 percent coincided with Mario Draghi finally introducing quantitative easing at the European Central Bank, as well as a growing realization among currency traders that Janet Yellen was getting serious about raising interest rates at the Federal Reserve some time this year. Both are strong incentives to favor the dollar over the euro.

Related: Greece Default Watch

But even as Greece's situation worsened over time, the euro's gyrations have become more and more compressed. And this month's 2.8 percent range is the smallest since the current anti-austerity Greek government came to power in January.

So I'd like to leave you with a thought experiment I've toyed with all year: If the current bailout plan falters and Greece's membership of the common currency club gets revoked, would the euro be stronger, weaker or unchanged the day after? My money's now on the latter. 

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author on this story:
Mark Gilbert at magilbert@bloomberg.net

To contact the editor on this story:
Cameron Abadi at cabadi2@bloomberg.net