Duncs

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

Manc

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.

sibsie

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.

Duncs

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

Duncs

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

bromleygirl

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.

dunroving

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!

Expat_Wannabe

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

John Murray

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!!

kazzuk

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

bromleygirl

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

John Murray

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

kazzuk

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............

Duncs

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

Expat_Wannabe

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!