Negotiation, Negotiation, Negotiation

UK Property Investment news and comments from Mark Harrison of YourPropertyExpert.com

This week’s currency movements

Posted by markharrison on December 16, 2007

For some while, I’ve been getting Smart Currency Exchange‘s weekly updates on currency movements.

Smart is a company I’ve used to transfer money to a company I’m setting up in Canada, and specialises in transfers for business and property-purchase purchases. (Basically, they don’t do small amounts, but have rather better rather than, say, my bank, for sending a few tens of thousands of pounds or more.)

Anyway, I’ve received permission to start reproducing their weekly newsletter here, so here we go – here is Friday’s. It’s written by Charles Purdy, their MD.
The rates given are the “inter-bank” rates, for comparison, not the “client rates for sending, by the way”.

  • Euro
    • 1.399 / £, compared with 1.388 last week
  • Cypriot dollar
    • 0.809 / £, compared with 0.807 last week
  • US dollar
    • 2.022 / £, compared with 2.030 last week
  • Canadian dollar
    • 2.057 / £, compared with 2.036 last week
  • Australian dollar
    • 2.342 / £, compared with 2.310 last week
  • New Zealand dollar
    •  2.629 / £, compared with 2.602 last week
    • Swiss Franc
      • 2.330 / £, compared with 2.298 last week
    • South African Rand
      • 13.848 / £, compared with 13.583 last week

    Charles’s Thoughts: Sterling has been steady and has gained against most currencies apart from the US$. Economic news has been mixed with pressure on house prices and sales volume countered by a surge in production price inflation. The latter means that the market has become unsure on future cuts in UK interest rates. The central banks of the UK, US and Euro land agreed a financing package in an attempt to add liquidity to a market that was/is in danger of grinding to a halt. Still uncertain times and an uncertain future for sterling.

    The US$ made gains against both sterling and the Euro. The Fed cut US interest rates by 0.25% which was less than hoped for by the market. However, a bit like the UK, producer price inflation is on the up [in fact hitting 34 year highs!]. Also retails sales for November were stronger than expected. So there is uncertainty in the market as to the likelihood of further interest rate cuts short term. But I don’t see the US$ strengthening too much further shorter term.

    The Euro is still the preferred currency when the other choice is the US$ or sterling. And inflation is of also of concern to the European Central Bank. So any cuts in Euro interest rates are very unlikely short to medium term. But clearly the credit crunch is having an affect on Euro land as the ECB were part of the consortium noted above. And Euro land cannot be immune to the slow down elsewhere. They may not have the overhang of highly priced properties throughout Euro land but businesses need to export and if elsewhere is contracting and the strong Euro makes these exports less competitive then the Euro will suffer.

    A mixed week for the high interest rate currencies. They all fell against sterling even though the carried trade seemed to have made a reappearance. Will be interesting to see how long this lasts.

    [Declaration: I receive a small commission for any customers I refer to Smart using the above link. This does not affect the price you pay for your currency, since it replaces money that would otherwise be spent on advertising.]

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