Liquidity vs Exchange rate, any advice?
 

Hi

I was wondering if anyone has been in a similar position.

Our house in SA is up for sale (2 months, 4 opens, 38 viewings, price dropped) and we can't exchange any cash back to sterling until the place is sold and we have the cash. I do have some cash in the UK though.

Should I lock in an exchange contract while the rate is so good and use GBP to pay the deposit ( it means I won't get the good rate on maybe 20% of our money)?

rab

Re: Liquidity vs Exchange rate, any advice?
 

depends on what your equity is in the property in australia , ie ifs it a 100000 for instance forex want 10% up front to validate the contract . i spoke to foreex last night and they would give me 55.4 for a 6 week contract but then i have a definate date to go . the contract is extndable to any amount of time but the rate changes i believe .Best speak to someone like forex. The plus side is they are giving a good rate for two months time really so reading into that i reckon personally the pound has a fair way to fall yet with another interest rate rise in aussie due in november and the aussie economy very vibrant compared to the uk .

Re: Liquidity vs Exchange rate, any advice?
 

Interesting, I am in Canada and about to sell my house soon and move back to the UK. I think you are correct about the pound, even if it does not decrease in value, it is not likely to move much higher soon given the amount of government debt.

Also, the Australian and Canadian dollars (and the SA Rand) are partly resource currencies and most likely to increase in value as the World economy improves.

The other conspiracy theory is that they are allowing the pound to fall on purpose to soften the UK public up for entry into the Euro.

Re: Liquidity vs Exchange rate, any advice?
 

If you can afford it I'd also recommend a forward purchase through a foreign exchange company, having a firm sale on the house first is always a plus. Remember to allow a bit of cash spare if the exchange rate moves the wrong way by a significant amount (15% say) between when you reserve the currency and when you receive it as you'll probably need to pay the fx people a bit more.

I'm using HiFX at the moment and they seem pretty good- they've a forum on here as well.

Re: Liquidity vs Exchange rate, any advice?
 

I am going to use HiFX. Do you know how far ahead you can reserve a currency and does that mean the rate is fixed at the time you reserve?

Re: Liquidity vs Exchange rate, any advice?
 

You can normally reserve it some time ahead and its fixed at the time of reservation, but you have to be able to send your funds to them within a certain time limit.

Re: Liquidity vs Exchange rate, any advice?
 

Forex told me upto a year ahead .would really like to know what they would give for the aussie dollar to the pound in a years time .

Re: Liquidity vs Exchange rate, any advice?
 

I often speak to people from currency exchange companies in my line of work and they will seldom give you reliable exchange rates that far ahead, currency exchange is just too volatile to be accurately assessed.

Re: Liquidity vs Exchange rate, any advice?
 

Have you had to pay for that rate KK. Our house is just about to go on the market and I spoke to HiFX and they want a 20% deposit for a forward contract.

Re: Liquidity vs Exchange rate, any advice?
 

nope i havent gone for it because i havent the 10% in cash lying around equal to the equity out the house , so im going to wing it and hope it doesnt change too much .
20% seems high what about forex ,i opened an account with them about a week ago , they are helpful too and also their website will show you what the current banks will give you as opposed to them .
All i did was photograph my passport , a utility bill [not phone] and a bank statement and your set to go .sell your house BPAY the cash to them and they will automatically transfer it to your benficiaries uk ban account ,which ofcourse is your own .

Re: Liquidity vs Exchange rate, any advice?
 

Yes, that's pretty much the same deal with HiFx apart from the 10% deposit. Will check out Forex as well, thanks. Like you we don't have that cash lying around so will have to wing it as well. I shouldn't complain too much, we have based our move back on an exchange rate of .48 and I can't see it getting back there for a while......unless our house takes 6 months to sell, god forbid!!

Re: Liquidity vs Exchange rate, any advice?
 

A few months ago i joined Ozforex,will transfer cash from sale of house to them when completion date achieved.(takes 24 -48 hours to get cash into account from proceeds of house sale).Transfer money to OZforex before 5pm then it goes in overnight.If you want the money to go into UK bank account real quick pay 30 pounds for CHAPPS.

We need to send money to solicitor in uk for buying a property ( we put an offer on /accepted).We have our buyers coming on Sunday to see if they want to buy almost all of our furniture or just bits and bobs:fingerscrossed:that its all the stuff we don't want.That way no need to divvy it up between the kids and any fighting going on:eek:

2 weeks till completion date:thumbup:

Re: Liquidity vs Exchange rate, any advice?
 

It seems the rate you're charged for buying ahead is based on a combination of the foreign exchange market volatility and the date you want the funds. Most fx companies allow you to forward buy/fix the rate for up to a year. May be worth you posting to the HiFX forum as the person who responded to my queries was helpful. I'd suggest talking to another two fx companies as well as there's bound to be some differences in the rate they quote. The other one I've used when we first came to Canada was Currencies Direct.

The deposit figure they quote- 10% for example - also seems to be the amount of difference between the two rates (reserving the forward purchase rate versus the current market rate when you actually get the money)that would result in you needing to give them some extra cash. This turns out to be 10% of the currency difference. It sounds more complicated than it is but the fx people can explain it a lot better than me.

Re: Liquidity vs Exchange rate, any advice?
 

Many thanks for all comments. It looks like for those of us going back to the UK, the pound is likely to remain weak into 2010. They are even talking about printing more money.

http://www.thisismoney.co.uk/markets...page_id=3&ct=5

Re: Liquidity vs Exchange rate, any advice?
 

Ditto thanks. Our problem is the house isn't sold yet. As soon as we can shift it we are in business.

I will ring HiFX and find out.

cheers rab