Ray

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..

AmerLisa

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

RubyWine

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

Duncs

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

weiser

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

AmerLisa

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?

weiser

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!

Expat_Wannabe

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

dunroving

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.

Expat_Wannabe

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.

sibsie

(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.

Ray

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

Duncs

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

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

Manc

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?

Pimpbot

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!!