But then their debt won't be paid off? So euro takes the hit to oust them? Or is that not right?
If Greece decides they're not paying then Euros should go up because it's basically reducing the amount of Euros potentially circulating. Deflation makes the currency appreciate. This isn't taking into the effect of risk off behaviour which will mean European investors buy more of German bonds.
Except it's the opposite that happens. If the Greeks no longer use Euros, but the same amount of Euros are in circulation, it means the amount of Euros in regards to the population will be bigger. Thus there will be inflation of the currency.