Re: Exchange rate - £ into $...
 

Woohoo, things are definitely looking up! Maybe this will last until we exchange money in January!
:D

Re: Exchange rate - £ into $...
 

Do you think with the capture of Saddam that the dollar might strengthen? I am planning to exchange pounds to dollars & the rate is very good but I won't be exchanging until feb 2004 so was wondering if that might have some affect to the poumd VS dollar

Re: Exchange rate - £ into $...
 

I'm worried a bit about that as well. Would be interested to know the same answer.
:confused:

Re: Exchange rate - £ into $...
 

Today its at $1.765 so i wouldnt bet on it. Even if it did it would be a sentiment only minor blip. The dollar is falling because the economic fundementals say it must fall. They wont correct for a while and so it will keep trending down. It may fluctuate but it will be a constant downward trend. I reckon by Jan Feb next year it could easily be below $1.80 and the rate its going now $2 is not impossible in the future.

Word of warning i am not a professional money analyst so dont think this is special advice. But i have an interest in economics and i read a lot. So these are my best guesses.

regards,

Duncan

Re: Exchange rate - £ into $...
 

thanx Duncs, that makes me alittle happier now. So in your opinion the dollar is on a downward trend for how long? anything longer than 2-3months is good in my books :-)

Re: Exchange rate - £ into $...
 

I don't think Duncs expertise or not in money matters should be taken to be more than guess... I seem to remember his financial past was not of the most perfect..

Re: Exchange rate - £ into $...
 

Woohoo, I'm hoping to exchange sometime in January, I love it!
:D

Not meeeeeeeeeeee. I'm over here in UK now for some three months and have to take money out of my bank in USA! Will have to put myself on a budget I guess :eek:

Re: Exchange rate - £ into $...
 

I am not an expert but i am not just guessing either by the way i may have gone broke but it was because of bad business debts from a guy who is now heading for jail.

Hey its just my opinion but i posted several months ago that it would go below $1.75 and today its $1.77 so maybe my guesses have some germ of fact to them.

The bottom line is that the USA has a substantial trade and budget deficit. This will drive down the dollar its just basic economics. The only thing keeping it from dropping quicker is the far east nations buying dollars over value to sustain their own trade surplus. Those are just economic facts and thats why i reckon it will keep going down. If you have a different opinion then go ahead and post it and your reasons. I am not saying people should act on my view and i am clear that i am not an expert money trader but based on my (very well educated) guesses the dollar will keep going down for the next 6-9 months at least and will be below $1.80 maybe even as far as $2 on current trend.

regards,
Duncan

Re: Exchange rate - £ into $...
 

I need more good news like this Duncan, cheers :-)

Had to bump up this thread. Just checked the currency exchange - $1.812 Waaay Haaay Duncs, you were right. Any ideas on how long it might last?

I was going to bump the thread myself soon if no one else had done it :-)

I would like to ask the same question as well to Duncan

thanx!

Been reading all that I can on this over the past few weeks to see when's the best time to gamble! Basically there's three main causes why the dollar is so weak at the mo (yep another Economics student)

1) The US has a $600bn current account deficit & it looks like its getting bigger because its having trouble attracting money into the country at the moment.
2) Low interest rates in US (1%) compared to the UK (3.75%) mean that the interest rate differential is in the UK's favour and this won't help with point 1!
3) China & Japan buy the US$ to stop their currencies going up (would be bad for their exports), whilst Asian central banks have diversified to the £ and € (good sign to avoid the $)

Citigroup have estimated that the $ needs to fall by another 20% over the next 2 years. Whilst Deutsche Bank has predicted that the £ will be strong against the $ for several more years. Loads of other analysts have stated in their new year recommendations that they will be investing in Britain to avoid the declining dollar.

Things that would make the dollar stronger would be anything that would bring money into the US (interest rate rise - November presidential elections make this unlikely, increase in consumer confidence over BSE and numerous other variables) I'm holding off for the next couple of months at least (not moving over yet, since have yet to find an internship :( but will open up a $ account or buy shares when I think the dollar has peaked) but at the end of the day its all a gamble and it just depends how long you can hold out for!

P.S. Still looking for advice on finding an internship, so any help is always greatfully received

;)

If you had posted this back in April/May, you'd have no trouble getting an internship - in fact all the major banks would be courting you!

Like everything else, economics is easier in hindsight. Where were all the experts 6 months ago when I was thinking of wiring three years of hard savings for a deposit on a UK house? Now I'm stuck looking at about a 5,000 sterling drop in what I'd get. Aw, shucks.

True, not just with Economics either I guess! Anyhow, just to complicate matters further, you could consider taking out a form of 'insurance' on currency movements by hedging your $ exposure. Basically what you do is 'go short' on the dollar if you think it is going to fall further, which effectively means you borrow $s (from a bank/investment house) and then you sell the currency (this is all theory by the way, you don't actually physically see the money). Your aim is to buy back the currency when it is cheaper and you 'repay' the bank and run with the profit.
Basically if you had your money in pounds and you were wary of converting to $s in case you could get more in say 6 months, then you short on $s. (Effectively selling $s at current price & hope to buy them back when they fall even further). Like anything its just a form of gambling, but all the major international firms do it to avoid their profits being affected by a major currency change in the countries they export to.
If anybody has a large amount of money to convert (like for a deposit on a house) then I'd suggest they discuss this option with a financial advisor because it can make quite a difference.

(disclaimer - I know bugger all about the money market)

I have a chunk to transfer from £ and € into $. I spoke to my financial advisor and he tried to explain to me why the $ keeps falling. He said it's something to do with the Bush adminstration who have a very different policy to Clinton when it comes to the $ rates. He said I shouldn't panic and that it will probably increase more.

Of course he did explain this in far more succint terms but I can't for the life of me remember the terminology he used.

LOL Sibsie... Thats what I call a technical disclaimer ..

Hmm $1.823 today and still dropping. I seem to have the trend ok.

I think this will continue for all the reasons listed by expat wannabee. The current account deficit is around 5% of US GDP which is way to high to be sustained and needs to fall to around 2.5% so i reckon we will see a continuing decline until that levels out. This could indicate a 18month to 2 year trend but i would hedge my bets and say i reckon decline for at least the next 6 to 9 months with possible continuing decline after that. The real spanner out there is the foreign exchange reserve of Asian banks. They have been buying dollars to keep their own currencies low. Around 2/3 of the major central banks in asia hold approx 2/3 of their foreign exchange holdings in US dollars. The possibility is that they will diversify towards the euro more strongly and expand their euro holdings from approx 19% to a more balanced 30%. If they do then the dollar could crash not just decline. All in all there is little on the horizon to suggest a greenback recovery anytime soon.

Most of this has been obvious since last year and i recall being comprehensively dissed back in oct 2003 when i suggested the dollar would fall futher. A little smugness i think :p

For Dunrovings benefit as you were quite jippy with me on another thread, as it happens i did figure this out last year and we moved my wifes cash assets from the usa to uk in early spring 2003 then we moved it back again in late oct, because we needed to buy a car once we got back to the US. It wasnt a huge difference but i reckon it gained us 10% or around $1500. One of these days i will actually have enough money to gamble with that i can make real killing but hey done that went broke!!! but will try it again some day.

regards,

Duncan

How is this going to affect the NYSE and Nasdaq?

There has been a little recovery on Wall Street recently, Will this be affected? or will that crash if the currency takes a shit?

Also when the dollar was $1.4 to the pound, a can of corn here was $0.25

Now the dollar is $1.8 to the pound, a can of corn is still $0.25

If the currency crashes, with that affect internal prices, or just import/export trade?

I hope like Duncan says, it continues to fall. I have an insurance savings bond maturing in febuary that should look pretty sweet once its converted into dollars. With any luck, this trend will continue into june when I have another one ready to cash.

Cha Ching!! :D

If the dollar falls its generally good news for the USA internally. Lower dollar means prices of US manufactured goods in overseas markets go down so trade goes up more production, more profits, more jobs. Thats will cheer wall street and sustain a period of growth.

Manc. Where is the corn from? if its US corn why would the price change?

The people getting screwed are europeans, the euro to $ rate is killing them. To compete in US markets they cant raise the price or they lose market share to domestic producers so they lose profit instead. I reckon BMW will be taking a bath in the US right now but dare they lower the number of cars they sell(at a loss) and lose out market to others? tough choice lots of cost in switching your goods to other markets so mostly you just suck it up. Most likely a low dollar means a euro area recession or stagnation and growth in the US market for while. Long term not so healthy if you kill your overseas markets who buys your goods long term? but these are all questions for way after this electoral cycle.

regards,

Duncan

just using corn hypothetically.

could be a can of bean or whatever, my point was the price hasn't changed since the dollar was $1.4 to the £1 to $1.8 to the £1.

I'm confused now. No change there. But I thought the $ had fallen against the € which is better for Europe?

My monthly income is in £ and my bulk assest in € and I'm holding off transferring my € into $ for a little while, til May I was reckoning on.

The US $ is down against both.

Its bad for europe as now euro exports to the USA cost them more and imports from the US are cheaper. This will likely stop the euro zone from getting into growth and prolong its recession. The problem for the US is if it trips off a world recession which ultimately comes back round to bite the USA in the ass.

regards,

Duncan

it wont always as intially the importer just soaks up the difference in reduced profits.

So now we have established that the dollar is falling relative to the pound, what do the experts - Duncs and Expat Wanabee -suggest for those of us that are moving the other way back to the UK and want to convert their dollars to pounds??

I'm sure the advise will be to hold off for a better rate. Should I put my money into a dollar account say with Citibank that I can access in the UK and convert it over when I need the funds for a downpayment??

I'll be moving this summer so any help advice would be great. :)

Citibank dollar a/c sounds like a good idea, though if you don't already have a Citibank account in the UK, it may be difficult to open one while you are living in the US. I hit that hurdle recently, tried to open a current account with Smile - and I'm already their customer (savings account and cash isa). Seems pretty stupid that you can't put money in a bank in your own country.

Hard to know what to do when things are like this. The same experts who are pronouncing in the news that the dollar will continue to drop were saying nothing mid-year when the dollar was at $1.40-ish - and we all know what's happened since then. If most of them didn't see what was coming then, how come they're so confident now? Bit like the tech bubble.

I've decided to shelve my plans for a while - I just can't bring myself to convert at $1.82 when it was so low just 6 months ago.
Looking at the historical trends http://research.stlouisfed.org/fred2/data/EXUSUK.txt the dollar has traded above $1.80 to the pound for several years at a time (see 1977-1982), but at other times it's returned to $1.50 within a few months. Scary thought that we may be heading into a long period of weakness for the dollar (for some people, anyway). Fingers crossed!

I think you might be thinking the wrong way round here Bromleygirl! If the dollar gets weaker against the pound (as lots of people are predicting) then it would be better for you to convert now as you will get a better exchange rate now. For example if you have $10,000 at an exchange rate of $1.80/£1 you would get £5,555 but if the dollar continues to fall to (for argument's sake) to $2/£1 then you would get £5,000. You would therefore get £555 less by waiting (But only if the $ drops a further 10% or so) Unfortunately it doesn't really work in your favour to have $s at the moment since the pound is so strong. If you have a large amount of money to convert, then I'd suggest talking to a professional about your options (futures contracts as insurance). Obviously no one can say with absolute certainty that the dollar will contine to fall, but it certainly doesn't look promising :(

The Dollar has been dipping for a few days - and is now down to $1.79 for £1 - from a high of $1.85 last week.

From the "experts" in this thread, I was expecting a continued upwards price - and many newspaper finance columns seemed to point to a price of $1.90 within a few months.

Would any of the economics experts on the Board wish to speculate as to whether this is a minor blip, or a reversal of the previous trend?

I'm hoping it's a blip, as if moving to USA hopefully by the summer, I was hoping for $1.90 - $2.00 for £1, but now I'm sweating!!

What about us poor people that only got $1.58 back in September

And what about us poor people that are moving back to the UK and need the $ to improve!!

now I feel SOOO selfish... :(

I was last in USA in November, and got $1.62 for £1 - and I was happy with that at the time. But now, with people predicting $2.00 - I've got greedy :mad:

Iv'e been watching the dollar go up and up. Daydreaming about the brand new car and new furniture I could have bought if we had got $1.80 back in September. Still looking on the bright side, we still got more than if we had exchanged back in 2002 - I keep telling myself we did ok, we did ok, we did ok, we did ok............

I would think its a short term rally, its not unusual. It did the same around september having hit $1.69 in august it dropped back to around $1.55. Then as you know fell still further. All the basic underlying facts are the same still and long term they predict the trend so i would still bet on further decline once the rally ends.

As i said before though i am just an amateur so dont go betting the house on my guesses.

regards,

Duncan

I agree with Duncs, nothing fundamental has changed. Just been browsing the FT website and one article stated:
'What could the US do to stop the fall? The normal methods would be to talk up the dollar, raise interest rates or intervene in the markets. ' I read last week about an influential economist (but for the life of me can't remember the name of the guy) saying that the dollar couldn't afford to fall any further and then the dollar rallied to $1.79 or so. But it being the presedential year, the US government is not expected to put interest rates up and Bush is apparently more than happy for the $ to continue to fall because its good for exports (so he's not likely to intervene). On this side of the pond UK interest rates are expected to rise again in the next review, which would (in theory) bolster the pound again.
Once again though, hindsight is a wonderful thing and you should only hold out for as long as you feel comfortable!

Bugger. I panicked yesterday and changed money as the dollar was sliding.

Then the bloody thing went back up almost four cents today.

G1ant

You still got a very good rate than most people did 4 or so months back, at least you were in a position to exchange, I still need another month before I can exchange. May I ask what rate did you get eventually and did you exchange from a bank?

I've been following all this talk re: prediction of future of $/stlg rate. I have ~$10,000 that I need to buy pounds with (returning to UK after 2 years employment in US).

I'm wondering if online currency trading (e.g. www.oanda.com) is an option. If I do a bank transfer, then it seems that I have basically no control over the exact rate (i.e. the transfer seems to take several days, and pass through several hands over the course of it's journey, and I'm not sure whether it'll take the x-rate when I request the transfer, or one several days hence).

My idea of online trading would be that I can say "buy now" when I think the rate is at its best. But I have no idea about the fees involved.

Ta!

There's an interesting article in the Jan 26th issue of Newsweek, about how the only options are to 'cut the deficit, perhaps by raising interest rates to discourage borrowing, but that risks choking off recovery as the November election approaches. The other is to let the dollar fall, making it cheaper for foreigners to fund America's shopping. Federal Reserve chairman Alan Greenspan made the U.S. choice plain when he told a Berlin audience last week that the dollar's decline was not a worry.'

All indications are that last week's strengthening of the dollar was a blip and that he decline will continue! Not sure about trading online, but you're only going to be talking about a couple of percent (at the most) over a few days anyway, so the 'traditional way' is just as good really!

thanks Wannabe, I'll check out the newsweek article. Although, it's probably wishful thinking, as the consensus does seem to be that the dollar's going to slide off the radar.

Of course, an option would be to sink my savings into some american-produced goods, and then flog them in the UK...(e.g. I recently discovered that an $800 Fender guitar costs 800quid in the UK). Wouldn't begin to know how to handle customs though.

Re trading question: I know 1-2% doesn't sound like much, but if I was going to just burn $100-$200, I would rather get a pretty reasonable night-out out of it! I just wish the whole money-transfer process was a bit more transparent. :(