Republic of Cyprus achieved independence in 1960, located in the eastern Mediterranean Sea close to Syria and Turkey. In 1974, the country split into two sections, Northern Cyprus ‘Turkey Cypriot Area’ and Southern Cyprus ‘Greek Cypriot Area’. Total population is small at around 800,000 with 180,000 living in the Turkey Cypriot Area with the rest living in the Greek Cypriot Area which is now tied to the European Union (EU). Important historical dates include Turkey Cypriot Area establishing independence in 1974 with the support of the Turkey military, Greek Cypriot Area joined the EU on May 1, 2004. Geographically, Turkish Cypriot Area has 37 percent of the land use on the island of Cyprus.
Economic Statistics Greek Cypriot Area: GDP estimated at $16 billion USD (2004-05) as measured by purchasing power parity with corresponding GDP/Capita at $21,600 USD. GDP growth for year 2005 came in at 3.8 percent. Inflation in 1997 was low at 3.5 percent, inflation for 2005 came in at 2.3 percent. Public debt is at 72 percent of GDP. Foreign exchange reserves are measured at $4 billion USD (2005). Interest rates for January 2006 were set at 4.25 percent. Tourism and financial services represent 75 percent of economy. Unemployment was recently at 3.5 percent.
Turkey Cypriot Area: has approximately one third the GDP per capita level as the southern Greek part of the island. GDP as measured by PPP stands at $4.5 billion USD (2005) with corresponding GDP/Capita at $7,135. GDP growth came in at 15.4 percent in 2004. Inflation in 1997 was high at 87.5 percent, year 2004 at 9 percent. Unemployment for 2004 was measured at 5.6 percent.
CURRENCY: ISO Symbol for Cypriot pound ‘CYP’, ISO Symbol for new Turkish lira ‘TRY’. At time of review on January 20, 2006, the Cypriot pound had an exchange value of 0.4743 CYP to the US-dollar (USD) while the new Turkish lira was valued at 1.336 TRY to the USD.
Greek Cypriot Area: the Cypriot pound is currently in circulation although the Euroland euro is expected to replace the pound by 2007-08. The pound has entered ERM II on its way to euro membership.
Turkey Cypriot Area: is fully dollarized as the new Turkish lira is presently in circulation since 1974. In Northern Cyprus, parallel currencies to the new lira include Cypriot pound, US-dollar and British pound. Those currencies are accepted but the new Turkish lira is the only legal tender currency. Please visit TURKEY as presented in this BankINTRO.com currency index for further details regarding the new Turkish lira.
CURRENCY HISTORY: Greek Cypriot Area: Cypriot pound came into circulation in 1879 on par with the British pound up until 1960. From 1960-72, the Cypriot pound was then pegged to British sterling, in 1972 it was linked to the US-dollar and from 1973-92 the CYP was weighted to various currency baskets. From 1992, CYP was then pegged to the European Currency Unit (ECU). On January 1, 1999 CYP was pegged to the Euroland euro then graduated onto joining ERM II on May 2, 2005. Historical exchange valuations for the Cypriot pound include: November 1996 at 0.46087 CYP to the USD, January 1998 at 0.53458, July 1999 at 0.55379, October 2000 at 0.67165, June 2003 at 0.50103 and December 2004 at 0.43247.
Turkey Cypriot Area: historical exchange quotes for the new Turkish lira include January 1991 at 0.00296 TRY to the USD, January 1992 at 0.00527, January 1993 at 0.00864, January 1994 at 0.01534, January 1995 at 0.0402, January 1996 at 0.0605, December 1996 at 0.1048, December 1997 at 0.1997, January 1999 at 0.323, January 2000 at 0.546, April 2001 at 1.2159, January 2003 at 1.654 and December 2005 at 1.3525. The new lira replaced the old lira by a factor of 1 million to 1.
CURRENCY FORECAST: reunification politically may not result for the two divided regions, but ironically unification may occur in their currency use. Turkey is in negotiation talks with the European Union with possible EU acceptance by year 2015 to 2020. Accordingly, acceptance of the euro would follow for both Turkey and Northern Cyprus. So it is quite possible that currency union may evolve prior to any political union in the very long term as election results from 2004 suggest that this may take several years of healing and negotiations to come. In April 2004 Cyprus election results have the Greek section overwhelmingly voting ‘NO’ by 75 percent for reunification with the Turkish Cyprus. Conversely, The Turkish Cypriot Area voted ‘YES’.
