Sterling to devalue?
Discussion
A good point for me:
Negotiated a 2:1 Aus$ to £ rate for my salary package (I'm moving to Oz in Dec).
Bad Point:
We have cash and assets in Sterling and it's dropped to 1.64 and still falling so our net worth is rapidly being reduced.
For reference the Sterling used to traditionally be around Au$2.5 and was so up until three odd years ago!!
Negotiated a 2:1 Aus$ to £ rate for my salary package (I'm moving to Oz in Dec).
Bad Point:
We have cash and assets in Sterling and it's dropped to 1.64 and still falling so our net worth is rapidly being reduced.
For reference the Sterling used to traditionally be around Au$2.5 and was so up until three odd years ago!!
Edited by robm3 on Tuesday 28th September 11:26
It's a race to the bottom, but I don't think GBP is the worst place to be.
If the spending review does what is intended, I would think GBP would strengthen in comparison to EUR and especially USD, both of which have seen less willingness to reduce spending and more willingness to use quantitative easing.
My view is that the safest bets are AUD and NOK, but everyone already knows that.
Asian currencies could be interesting...it would be great to do a RMB trade, but the risk is that US/China trade spats start and they start dragging each other down.
Perhaps something like Korean Won might be interesting?
I am not sure sterling will slip much from here to be honest. The Aussie is strong largely as a result of their comparatively high interest rates and a trillion dollars of hedge fund money playing the carry trade plus continued support from resources. If Gillard introduces some form of resources tax she risks killing the goose that has been laying golden eggs for a decade or more. It would be unbelievably stupid in a country that doesnt really need the money (debt to GDP ration of effectively sero). I am lucky enough to have dual nationality and property in both locations but have actually just put the Sydeny house on the market as a 3% gross yield and 6% interest rates in a market that is already over-inflated is not a good combination as far as I am concerned. Happy to take the AUD and run at this rate.
loafer123 said:
It's a race to the bottom, but I don't think GBP is the worst place to be.
If the spending review does what is intended, I would think GBP would strengthen in comparison to EUR and especially USD, both of which have seen less willingness to reduce spending and more willingness to use quantitative easing.
My view is that the safest bets are AUD and NOK, but everyone already knows that.
Asian currencies could be interesting...it would be great to do a RMB trade, but the risk is that US/China trade spats start and they start dragging each other down.
Perhaps something like Korean Won might be interesting?
Perhaps "interesting" is not a good word where money is concerned. If the spending review does what is intended, I would think GBP would strengthen in comparison to EUR and especially USD, both of which have seen less willingness to reduce spending and more willingness to use quantitative easing.
My view is that the safest bets are AUD and NOK, but everyone already knows that.
Asian currencies could be interesting...it would be great to do a RMB trade, but the risk is that US/China trade spats start and they start dragging each other down.
Perhaps something like Korean Won might be interesting?
jeff m said:
Foreign currency mortgages out of fashion then
Letting the currency slide is a time tested way of dealing with debt, assuming the debt is in your own currency of course.
That is a good point.Letting the currency slide is a time tested way of dealing with debt, assuming the debt is in your own currency of course.
However, letting it slide and a forced devaluation are very different.
The debt appears structured in GBP, so it must be tempting.
At what point would that get the UK into trouble in Europe?
We would run the risk of alienating just about every member of the G20 is Sterling dropped back to the lows of December 08.
Now, about increasing my UK mortgages to offset the Euro based ones in the short term...
It's war Jim but not as we know it.
"An "international currency war" is underway, Brazil's finance minister, Guido Mantega, has warned.
His comments follow a series of interventions by governments to weaken their currencies and boost export competitiveness.
Japan, South Korea, and Taiwan are among those that have recently tried to cut the value of their currencies.
In a speech in Sao Paulo, Mr Mantega said the competitive devaluations were effectively a new trade war.
"We're in the midst of an international currency war," he told a meeting of industrial leaders. "This threatens us because it takes away our competitiveness.
"The advanced countries are seeking to devalue their currencies."
Mr Mantega has been trying to talk down the value of Brazilian real.
The currency is at a 10-month high against the dollar, and has been described by analysts at Goldman Sachs as the world's most overvalued major currency.
Last week's $70bn share offering by state-oil company Petrobras has contributed to a massive inflow of dollars to Brazil, which is attractive to foreign investors because of high interest rates and its rapid economic growth.
Mantega said the country still had an "arsenal" of tools available to weaken the real, although he did not explicitly talk about intervention to weaken the currency."
http://www.bbc.co.uk/news/business-11424864
Now why is that shiny yellow stuff so expensive?
"An "international currency war" is underway, Brazil's finance minister, Guido Mantega, has warned.
His comments follow a series of interventions by governments to weaken their currencies and boost export competitiveness.
Japan, South Korea, and Taiwan are among those that have recently tried to cut the value of their currencies.
In a speech in Sao Paulo, Mr Mantega said the competitive devaluations were effectively a new trade war.
"We're in the midst of an international currency war," he told a meeting of industrial leaders. "This threatens us because it takes away our competitiveness.
"The advanced countries are seeking to devalue their currencies."
Mr Mantega has been trying to talk down the value of Brazilian real.
The currency is at a 10-month high against the dollar, and has been described by analysts at Goldman Sachs as the world's most overvalued major currency.
Last week's $70bn share offering by state-oil company Petrobras has contributed to a massive inflow of dollars to Brazil, which is attractive to foreign investors because of high interest rates and its rapid economic growth.
Mantega said the country still had an "arsenal" of tools available to weaken the real, although he did not explicitly talk about intervention to weaken the currency."
http://www.bbc.co.uk/news/business-11424864
Now why is that shiny yellow stuff so expensive?
Edited by Fittster on Tuesday 28th September 18:16
RYH64E said:
However the euro and USD aren't particularly strong either, Sterling has had a bit of a rally against the dollar recently, we're back to about 1.58 now which is nearly ok for me as an importer.
My parents were stationed in the U.K. in the early 60s and remember Sterling / USD being around 1.70; my time there in the 80s had it around the same. This seems to be the consistent ratio in recent history does it not?Jimbeaux said:
RYH64E said:
However the euro and USD aren't particularly strong either, Sterling has had a bit of a rally against the dollar recently, we're back to about 1.58 now which is nearly ok for me as an importer.
My parents were stationed in the U.K. in the early 60s and remember Sterling / USD being around 1.70; my time there in the 80s had it around the same. This seems to be the consistent ratio in recent history does it not?It is a sign of the times that well over 90% of my dollar spend goes to the Far East rather than the USA, not sure if that is a good thing long term.
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