Sally Redux

OK I get the piggy banks being no longer full of $$$, so I think the questioning is re: that. But then I'm lost again.

Pulaski

Well maybe swapping USD for other currencies was a mistake? .... Remember paper money (not backed by gold or silver) is more or less a confidence trick. $1 is worth what everyone thinks it is worth, but if you try to deviate from the herd, and others don't follow you, because they still believe the USD is the way to go, then you'll end up looking silly. Central bankers are a conservative bunch, and they don't like to look silly.

Sally Redux

I think my money is about to become smoke and mirrors

bigglesworth

Damn! all the interesting stuff goes on during Europe's night. Sorry everyone I sort of ran away with myself.
Yes indeed, Pulaski hs very kindly nailed it for me, and more eloquently than I could.
The only bit I could elaborate is that it is not just that central bankers are conservative, but they want/need their reserves to be worth SOMETHING. When it was tied to gold life was quite easy. But floating exchange rates mean that any foreign currency they hold can go down in value. And the US does not have a great record on that. Neither does the UK mind.
But even worse than that would be if the currency they hold ceases to exist. If the Euro had/should collapse, it would still have constituent parts that would (hopefully) stand behind an element at least of their joint commitment.
Would China do the same?
A reserve currency is not only where central banks put their surpluses. It is also the medium of international trade. If you want to buy a barrel of oil, you have to give the seller a currency he wants. And that has to be something he can readily exchange for what he actually wants.
Sorry I was obscure.

Vadio

No trick to having a currency crystal ball. Really, really simple.

Call or email me. If I am about to do any type of currency exchange, then you must run very fast in the opposite direction. I have a long track record of holding the wrong currency and exchanging at the worst possible rate. Of course a couple of times I had no choice, for example when sending money from the US to the UK to buy a house. Other times, just didn't trust my instincts.

When the first crisis hit in Greece, and both the Euro and the pound tumbled, I came oh-so-close to sending a big chunk of change from the US to the UK...and didn't. Boy did I come to regret that decision. Would have meant a far "cheaper" house purchase down the road.

dunroving

Similar experiences to Vadio, mainly due to "no choice". I last exchanged in 2007, at $2.00, because I needed a house deposit. I think I exchanged about $50k, so got £25k in return. If it had been at today's rates, I would have got more like £29.5k. But, spilt milk and all that, and the timing meant I am now on a 1.09% mortgage rate so swings and roundabouts.

As others have said, the general range is about $1.50-$1.70. If you don't need the money now, one strategy is to put it in a dollar account with at least some interest, and wait until it hits $1.50-ish again (might be another 5 years, though).

Since I have been back, it has ranged from £2.00 to $1.50. I still have a chunk in $$ (not huge, but enough to make a difference what the exchange rate is). On eth two (I think) occasions the £ has gone to $1.50, I was not in a position (literally - I was away from home) to exchange. I'm stupid - should really set up an XE account or similar and just set up an automatic exchange. If I did so, I'd set half to exchange at $1.60 and half when it reaches $1.50 or $1.55.

If you really need the money within the next 12 months I'd do what someone else has suggested and drip feed it so you spread the misery and happiness.

solanocasa

To Vadio

On the timing of currency exchange - you and me both. I keep intending to get a notice printed, to hang on my back while I'm out conducting business -"It's better not to stand in the queue I'm standing in".

By the way, on one single day in 1982 (or was in 83 ?) the dollar and the pound were 1.00 to 1.00. I needed to get some pounds for a holiday trip to visit my parents, so walked around town-town Dallas looking for a bank to do the exchange. No-one in Dallas
could do an immediate currency exchange transaction - it took 4 days to go through, by which time I had to pay $1.13 to the pound. Boy would I settle for that now.

Sally Redux

You are talking to a person who managed to sell a house in London at a loss

Thanks for all the thoughts, and the education bigglesworth and Pulaski.

I think we will move enough for immediate needs now and defer a decision on the rest.

bigglesworth

S R you are very welcome

If it is any consolation, knowing a lot about how foreign exchange and markets work doesn't actually make you any better at timing. If you need to do something just do it. There seems to be some sort of Damoclean rule that says if you try to finesse these things, they always bite you in the a*se. Well certainly in my case they do.

Sally Redux

Yes that's true

jmood

Sorry :-(
In which year did you sell and which year had you bought?

Sally Redux

As I remember, bought 1989, sold 1994.

bigglesworth

Just a further thought SR. People tend to think of currency in terms of the one they are looking to buy against the one they wish to sell. In reality of course it is a complex matrix. Sure the big headline currencies are the first to look at, but sterling/dollar rate would not move in isolation. And it is not sterling that wags that particular dog. For sterling to move to 1.75 all the other currencies priced against the dollar (which essentially if simplistically all are) would have to adjust against BOTH.

It is really more a question of where the pressure shows. I think we Brits/ Americans look at £$ whereas our Antipodean counterparts look at the Aussie against sterling, even though the driver of the Aussie I would have thought is more likely to be its relationship with the US dollar.

The biggest currency swap is however $€, and if there is to be a major move that is where it will be. For sterling to move up in isolation against the USD would require a change in comparative economic/fiscal performances WITHIN Europe.

What seems to be happening however is an absolute decline in EU performance (or more properly perhaps EZ performance). Most commentators seem to believe that the crisis in Europe has gone away. Perhaps they are right. But perhaps they are very very wrong. France's absolutely shameful conduct vis a vis Russia over the past few days is a sign of just how desperately weak Europe is.

The reason I emphasise that is that if serious people were to start thinking the same, the Euro could take a very sharp drop as people unloaded what they have piled into reserves. And there is only one place that would go - the greenback.
It is a very long shot. But personally although Britain is doing better than the naysayers suggested, its performance is still far from stellar.

And to complicate it further there is the very real prospect of a new Government next year. One that seemingly has not learned that in the modern world it is ever more essential to to live within ones means. Sterling could look very different by the autumn.

To really put the cherry to the cake, a couple of years back I decided that if I ever saw 1,25 £€ again, I would cover my next three years needs.
Now that it is there I am finessing it. I am usually a VERY reliable contra-indicator,

Sally Redux

More food for thought. Thanks, Biggles.

jmood

What does this mean?