mapleleafbull

Hi All,

I flew into Vancouver and activated my PR back in July and now back in UK making arrangements to make the big move.

I was hoping you could help, as I want to sell my house and convert the money to canadian dollars to buy a home out there but am put off with the current exchange rate, but am no expert on exchange rates etc

Do any of you follow the exchange rates and have any predicitions as to if the exchange rate is going to improve any time soon or even get worse?

I know nobody can say for sure but I would welcome any advice as I don't have any idea!

I will be changing hopefully upto £40,000 if I get what I want for my house.

Thanks

Thanks
Sophie

scribe123

This is just my opinion, but I think the exchange rate will probably remain pretty flat (+- 5 to 10 cents) for a while to come.

I don't think the UK economy will be strong enough to get to lofty heights of $2 or more in the near or medium future.

There may be people who are better qualified but that's what I think.

scribe123

I'm sure you won't, but I should add that I wouldn't base your plans solely on what I say.

I won't be held accountable if you exchange today at 1.6 (or whatever it is), and tomorrow it goes up to 3

Aviator

It has been around the current level for a long time. Depends how long you can sit it out, could be years. No way to tell, when or if.

Also remember that once you are a Canadian tax resident, any gain in the FX is a taxable capital gain and should be reported when you file your taxes.

mapleleafbull

Thanks, I didn't know about the tax, thats very useful to know

mapleleafbull

No worries thanks for your reply, it pretty much mirrors what most people I have spoken to have said.

Thanks Again.

JimboV6

I had the same dilemma a year or so ago, and decided to bring over only what I needed at the time because I didn't consider the exchange rate to be favourable. I got just over $1.57 to a GBP. Whatever you do, there will always be doubt or "what-ifs" somewhere down the line.

Maximise your cash by looking into how best to bring it over. With that sort of money, it's worth shopping around. I saved quite a few hundred pounds by using HiFX rather than a High St bank. Better exchange rate, and lower/fewer fees

Good luck!

CANADIAN CARPERS

In the same boat here. My financial advisor reckons UK interest rates at 0.5% is one of the main factors for the poor exchange rate (weak pound) so I'm hoping exchange rates will improve as UK interest rates rise.

MandyStock

My sons Economics teacher said much the same thing but reckons that UK interest rates won't go up until late summer next year (guesstimate) - so it depends how long you can wait & weigh it up against when you are moving. Better exchange rate versus CGT? We recently used UKForex to transfer a small amount of money to see how it worked & it went well. Funds were moved over within 4 working days & there were no unexpected fees taken out from UK or Canadian side.

Editha

It's not just the UK interest rate that will affect the exchange rate. It's also the Canadian rate, which is also low at the moment. For the exchange rate to change in your favour, you want the interest rate in Canada to remain low and the interest in the UK to go up.

London Mike

Idiot-features told Lloyds of London this evening that his monetary policy is a load of old crap and not worth the toilet roll it was written on .... Sorry, I meant that the UK economy is set to grow at an even slower pace than he was expecting. I reckon UK IR will stay as they are until late 2012 ...

canadian_critic

If you look at historic rates, you'll notice that the present exchange rate has been low for a long time, and in fact it's marginally better for your than it has been over that time (converting GBP - CAD).

You clearly do not want to exchange at a low rate, and the next week it shoots back and you lost a load of cash on the deal. Unfortunately that's always a risk in converting currencies. But it's a very low risk under the circumstances.

On a philosophical level, unless you plan to move back, you may as well convert whatever you have and then just forget about it. Even if the market swings back (highly unlikely), it's irrelevant to you if you're planning on staying.

Your main concern seems to be whether changing now is bad timing. There's just not enough happening to suggest that it would be, so if you get an exchange rate that gives you what you need to live in Vancouver, then I'd so go for it, and don't look back. I hope you've planned how long that would last you here though. It's going to cost you a lot more than practically anywhere you're moving from in UK. 40k should be your financial cushion and really won't last long in this city.

helcat12

Also, isn't it worth factoring in what you would earn in interest on that amount of capital in Canada?

There are lots of factors which affect whether exchanging or leaving money here is the right thing to do for you and that is one of them which never seems to get mentioned.

Here in the UK if I want short notice access to the money I will hopefully be getting from the equity when I sell the house, I have very few options.
Even a tax-free ISA will only probably get me 2.5% and even for that I might have to commit to a year. I am not even sure if I am still allowed to have an ISA once I move permanently abroad.

Everything above that (if you can find anything) will require a two years + fixed rate deal tie-in and loss of interest if you withdraw any funds during that time. So unless you can really do without that money for certain even in an emergency, it is not a viable option.

If you took £40000 to Canada and exchanged it to CAD now, you could invest it in Canada where you might be able to find a better interest rate.

Even if it was the same rate, you then have no worries about tax issues as you would if you left money in the UK after emigrating and want to transfer it later.

All things considered, you could find that transferring now is the better option when you weigh up the gains and losses on both sides of the water.

Aviator

Unless you lock in for a fixed term, best you'll get is around 1.25% interest (which is taxable). On the present FX of $1.59, a $0.02 swing up in FX is 1.25%. A whole years of interest in a 2c change. The FX risk is going to offer a higher potential return than interest will.

Any gain in currency value once you become a tax resident is a CGT gain, so 50% of the gain is taxed at your marginal rate. If you are a low earner, this might not be a lot. Good time to do this is in a year where you don't have a high income.

All interest is taxed at your marginal rate.

Steve_

Which is unlikely. The Canadian rate is more likely to move up in the short term and already has. Which is one of the reasons why the £ is at its lowest ever levels against the Canadian dollar.

The main reason however is that in times of uncertainty people like to put their money into resource companies and precious metals etc. and as Canada has a lot of that you have to buy Canadian dollars to invest in them, which makes the Canadian dollar more valuable.

Really what will cause the Canadian dollar to go down in any significant way is a recovery of the US economy and then people will plough their money back into the stock markets, I can't see that happening in a major way until 2014 at least. Then the £ will become more valuable as the city is a major financial hub as well.

I can remember back in 2003 the Canadian dollar was at $2.50 to the pound, I never dreamed it would ever go under $2.