The Cyprus Pound, denoted by the symbol CYP, is the official currency used in Cyprus. On May 2, 2005 the Pound joined the Exchange Rate Mechanism II, which was established in order to lessen exchange rate variability and help to attain European monetary stability. The Cyprus Pound is currently pegged to the euro, and in the future it will be replaced by it. This may happen as early as 2007, which Cypriot authorities are hoping for.
Sovereign credit ratings play an important part in determining a country's access to international capital markets, and the terms of that access. Sovereign ratings help to foster dramatic growth, stability, and efficiency of international and domestic markets.
What does it look like?
The internationally recognized government of the island, the Republic of Cyprus, controls the southern two-thirds of the island. The northern one-third is controlled by the Turkish Cypriots after a military invasion by Turkey in 1974. Mostly all foreign governments and the United Nations view the Republic of Cyprus as holding authority over the whole island of Cyprus; however, in practice it is only over its two-thirds. Reunification efforts have been going on for years. In 1960, after gaining independence, the Cypriot Constitution was laid out. The government is a republic and calls for a presidential system of government with independent executive, legislative, and judicial branches.
President: Tassos Papadopoulos since 2003 (note: the president is both the chief of state and the head of government, as of 2005 the post of vice presidency is currently empty as it is reserved for a Turkish Cypriot)
President of the Turkish Cypriot area: Rauf R. Denktash since 1975.
Governor of Central Bank: Christodoulos Christodoulou
Key Economic Factors
Ever since Cyprus gained independence in 1960, tourism has been given a high priority by the Government. It continues to be the backbone of the economy, a very significant part of Cyprus' GDP, about 10.4% for 2005. The bulk of tourists to Cyprus come from Western, Central, and Northern Europe, most coming from the United Kingdom. Positive trends in the tourism market are visible during points of strength of the Sterling to the Cyprus Pound. However, the downfall of this is that the Cyprus tourism industry is heavily dependent of the UK tourism market, while the UK tourists are extremely sensitive to the Sterling/Cyprus Pound exchange rate. The tourism sector is also a major source of job creation.
A very important component of Cyprus' economy is agriculture, meaning mostly small farms and sometimes subsistence farms. Although the share of the economy that comes from agriculture is expected to continue to decline from its independence, Cyprus' beneficial climate and location (near Western Europe, a leading market) ensure that farming will stay an important and stable part of the overall economy. This sector is a major component of rural employment, which helped the problem of urban crowding.