Charles’s Thoughts:  Sterling has had a bad week. First the minutes of the last Bank of England interest rate meeting were released and showed that the vote to reduce interest rates was unanimous. This surprised the market. Then the balance of payment figures were released. These were very bad with a huge net outflow of funds. And now the Christmas retail period is not going as well as hoped and house prices continue to fall in most places. All doom and gloom so it is not a surprise that sterling is suffering. Sterling only seemed to make a gain against the South African rand. Shows how the market views the new head of the ANC in South Africa!. But I suppose they did win the rugby world cup.

The US$ has been on the up. No clear reasons as to why apart from the need for US financial institutions to realise their investments so as to make their balance sheets look as good as they can by the year end. Also investors needed to cut their losses if they had “bet” on the US$ would lose further value. However I do wonder if this positive news is short term given the major economic problems faced by the US$ in 2008.

The Euro is still the preferred currency. Inflation continues to be 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 lent Euro 350 billion to financial institutions last week who were having difficulty borrowing elsewhere. And I still feel that Euro land cannot be immune to the slow down elsewhere. Talking to one of my clients who does a lot of business in Euro land he said there was a lot of pain being suffered by Euro land exporters given the strong Euro exchange rate.

As noted above all major currencies gained against sterling apart from the South African rand which faces problems given the markets uncertainty with possible political instability. Canada still has the most going for it with its huge natural resources but no currency is safe in the current climate. HAVE A WONDERFUL CHRISTMAS AND ALL THE EVRY BEST FOR 2008.

Why is Currency Management So Important? Using a bank could cost you £3-4,000 per £100,000 transferred. Buying at the “wrong” time could cost you many £’000′s more as rates can move as much as 3% in a very short period of time. Then add in transfer costs that the banks charge for sending and receiving funds and you could be looking at additional costs of £10,000 per £100,000 transferred. By developing a currency strategy and by working with a specialist currency broker these losses could be minimised if not eliminated.

Smart Client Testimonial: “Recent transaction was completed very efficiently. The process was well explained, all questions answered with confidence. The process was very simple to follow with excellent feedback throughout the process. Plus a great rate of exchange was provided. I will definitely use the service again” John Derek Thompson

If you haven’t opened a Smart account yet, call me on freephone 0808 163 0102 or fill out our online Account Form at: http://www.SmartCurrencyExchange.com/application.htm

How much will a Property Cost? To estimate the cost of a property simply DIVIDE the price of the property by the appropriate currency rate noted above. But note this is based on the inter bank rate so the actual cost will be slightly more.

Charles Purdy

Smart Resources

Currency Strategy Worksheet
Need help creating a Currency Strategy? Download our Currency Strategy Worksheet:
http://www.smartcurrencyexchange.com/downloads/CurrencyStrategyWorksheet.pdf

Currency Report
Have your read our 10-page Currency Report that outlines the top 3 mistakes that overseas buyers make when exchanging and transferring their money overseas? Get the report here:
http://www.SmartCurrencyExchange.com/downloads/ThreeMistakes.pdf

Currency Quotation
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