Gbp Sterling

[chiang mai]

Some members on this board have said that the future for Sterling looks ugly and having just read an article in The Nation (copied from The Observer) it seems the future is nearly here. The article suggests that The Pound is now being sold quite heavily and has fallen over 6% against The Euro in the past month. The BOE is almost certainly going to cut rates in December or January since the UK has high exposure resulting from Sub Prime. The commentator suggested that the currency rot would set in sometime in early 2008.

I wonder what strategies other Brits have who are Thailand based to manage the currency fluctuations and a currency conversion rate that could conceivably hit, I don't know, say sub 60 Baht to the Pound? For my part I have fixed 60% of my GBP funds at 6.5% for two years. The remainder is available at short notice and due to a timing issue I currently have only minimal funds in Baht.

May we keep the focus on Pound Sterling and not USD please.

[sonicdragon]

Agree that the outlook for the UK economy is not looking good. As for sterling itself, that's a much trickier question. I would expect to see it lose some ground vs the THB mainly because asian currencies will rise together with the CNY. Personally I have been selling the pound and buying CHF, CNY and SGD. I have long term ties to the UK, will visit every year for 2-3 months and expect (hope) my children will complete their education there. Thus I intend to keep some of my assets in GBP (around 20-30% max). For the rest I favour the 3 currencies just mentioned, and I'm also selling EUR.

[JimsKnight]

Well if it hits sub 60 I know a lot of British folk out here (yours truly included) will be looking at other countries to venture out to.

I think the sub 60 baht possibility is pie in the sky personally.

In all honesty I think we're all speculating a little bit too hard here. The rates aren't going down for definate, they may hold it. If they do well it's just time for some of us to tighten our belts and stop sugar daddying a bit to save money.

For one thing the baht is way over-strengthened and is likely to fall in value, which should balance any weakening of the pound.

[chiang mai]

Well if it hits sub 60 I know a lot of British folk out here (yours truly included) will be looking at other countries to venture out to.

I think the sub 60 baht possibility is pie in the sky personally.

In all honesty I think we're all speculating a little bit too hard here. The rates aren't going down for definate, they may hold it. If they do well it's just time for some of us to tighten our belts and stop sugar daddying a bit to save money.

For one thing the baht is way over-strengthened and is likely to fall in value, which should balance any weakening of the pound.

I don't know if you were here pre 1998 when GBP/Baht was 34 but I was and everyone accepted that as the price of the Baht against Sterling. Similarly, GBP/USD was almost fixed around 2.40 for a long time and then it changed - now it's changing back and many people are in shock as a result. That part is all about cycles as we doubtless all realize.

As for the question over whether UK interest rates will change or not you should read the BOE minutes. It's not a question of if but when and at what level will they plateau.

Finally, and I'm sorry if I appear to be challenging all your points it's just that I am trying to better understand other people's views on what has thus far been a USD centric discussion, why do you think the Baht is overvalued? My reading is that if anything it is undervalued.

[Prakanong]

Well if it hits sub 60 I know a lot of British folk out here (yours truly included) will be looking at other countries to venture out to.

I think the sub 60 baht possibility is pie in the sky personally.

In all honesty I think we're all speculating a little bit too hard here. The rates aren't going down for definate, they may hold it. If they do well it's just time for some of us to tighten our belts and stop sugar daddying a bit to save money.

For one thing the baht is way over-strengthened and is likely to fall in value, which should balance any weakening of the pound.

I don't know if you were here pre 1998 when GBP/Baht was 34 but I was and everyone accepted that as the price of the Baht against Sterling. Similarly, GBP/USD was almost fixed around 2.40 for a long time and then it changed - now it's changing back and many people are in shock as a result. That part is all about cycles as we doubtless all realize.

As for the question over whether UK interest rates will change or not you should read the BOE minutes. It's not a question of if but when and at what level will they plateau.

Finally, and I'm sorry if I appear to be challenging all your points it's just that I am trying to better understand other people's views on what has thus far been a USD centric discussion, why do you think the Baht is overvalued? My reading is that if anything it is undervalued.

It was about 40 for a few years prior to 1997 - this was due to the false strength of the THB and it being tied to the USD

The British economy is in pretty good shape - the sub prime will affect some of the financial institutions but everything else is looking OK.

[GuestHouse]

If a shift of around 10% in the exchange rates is causing people on fixed incomes to have to rethink staying in Thailand then I think they have a bigger worry in inflation.

As I have argued many times here on TV I believe the inflation rate for foreigners is higher than the published 'Thai' inflation rate on the basis that foreigners consume differently - An example might be automotive fuel, where foreigners in Thailand likely use more of this inflation hit product than than do Thais.

Non of that is comfort to anyone on a fixed income, but it is a cautionary tale to people who are still working and perhaps giving up earning potential to move to or remain in Thailand.

There's a lot of people living in Thailand on pretty meagre incomes who cannot possibly be saving enough to secure their future. More arriving daily and seemingly endless advice along the lines of 'tomorrow might never come'

Well it almost always does, and it always costs more than today.

[sonicdragon]

If a shift of around 10% in the exchange rates is causing people on fixed incomes to have to rethink staying in Thailand then I think they have a bigger worry in inflation.

As I have argued many times here on TV I believe the inflation rate for foreigners is higher than the published 'Thai' inflation rate on the basis that foreigners consume differently - An example might be automotive fuel, where foreigners in Thailand likely use more of this inflation hit product than than do Thais.

Non of that is comfort to anyone on a fixed income, but it is a cautionary tale to people who are still working and perhaps giving up earning potential to move to or remain in Thailand.

There's a lot of people living in Thailand on pretty meagre incomes who cannot possibly be saving enough to secure their future. More arriving daily and seemingly endless advice along the lines of 'tomorrow might never come'

Well it almost always does, and it always costs more than today.

Well said. I fully agree. Stealth inflation is with us. My wife tells me that the price of such items as butter, bread and milk have all risen sharply in recent weeks. This is only anectdotal of course, but I strongly believe that not only do foreigners suffer a higher inflation rate than Thais, but that inflation is systematically under-reported by the government.

[Theyreallrubbish]

Well if it hits sub 60 I know a lot of British folk out here (yours truly included) will be looking at other countries to venture out to.

I think the sub 60 baht possibility is pie in the sky personally.

In all honesty I think we're all speculating a little bit too hard here. The rates aren't going down for definate, they may hold it. If they do well it's just time for some of us to tighten our belts and stop sugar daddying a bit to save money.

For one thing the baht is way over-strengthened and is likely to fall in value, which should balance any weakening of the pound.

I don't know if you were here pre 1998 when GBP/Baht was 34 but I was and everyone accepted that as the price of the Baht against Sterling. Similarly, GBP/USD was almost fixed around 2.40 for a long time and then it changed - now it's changing back and many people are in shock as a result. That part is all about cycles as we doubtless all realize.

As for the question over whether UK interest rates will change or not you should read the BOE minutes. It's not a question of if but when and at what level will they plateau.

Finally, and I'm sorry if I appear to be challenging all your points it's just that I am trying to better understand other people's views on what has thus far been a USD centric discussion, why do you think the Baht is overvalued? My reading is that if anything it is undervalued.

It was about 40 for a few years prior to 1997 - this was due to the false strength of the THB and it being tied to the USD

The British economy is in pretty good shape - the sub prime will affect some of the financial institutions but everything else is looking OK.

The British economy is more heavily indebted than that of the US. Both government debt and personal debt. British house prices as a multiple of incomes are even higher than US bubble areas.

The unwinding of the debt bubble and the subprime crisis is going to have a huge effect as the gusher of money that the city of London has generated through all the debt fueled securitisation and debt fueled M&A deals is going to subside at the same time that tightening credit standards cause a steep decline in house prices at the same time as consumers reduce spending to try to scale back their personal debt due to their "saving" no longer being done by their house and more expensive and harder to get credit being the norm at the exact time that the reduced consumer spending causes a slowdown in all sectors and rising unemployment.

The idiot Brown has generated a huge deficit through the longest period of growth in British history meaning there's nothing in the kitty for government spending to take up the slack. Indeed, slowed rates of public spending growth plus rising government deficits will act as another drag on growth rather than being available for countercyclical stimulus.

The US Fed has decided to let inflation "solve" the debt problem and screw all foreign debt holders. The BoE has not yet made that decision and are still wavering. At the end of the day they'll have no option. Interest rates will be cut, inflation will rise and the pound will fall.

The pound is going to fall steeply against the Euro next year and will give up most of its gains against the dollar in 2009. The pound wil continue to gain against the dollar in 2008 as a lot of bad things related to what the world does with its existing holdings of dollar denominated assets prevent any kind of recovery.

As for what this means for the exchange rates against the Baht, who knows? Its a tiny peripheral market that can be buffeted in a big way by minor changes elsewhere. Its one wave on a lake of dollars, pounds, euros, remnimbis and yen. My personal guess is that the government will manage to keep it relatively stable apart from some inevitable strengthening against the dollar. Of course this depends on the election and the health of a certain important revered person.

[chiang mai]

I agree with the above. I think 2008 will see two forces at work - one will be strengthening the Baht and the second will be weakening GBP. The combined effect of the two could easily make for a sub 60 baht scenario in my book.

[BalthazarBeefheart]

I agree with the above. I think 2008 will see two forces at work - one will be strengthening the Baht and the second will be weakening GBP. The combined effect of the two could easily make for a sub 60 baht scenario in my book.

Thanks for bringing this topic up - I think for those of us on pensions paid in GBP then it is something that needs serious consideration. I myself tend to bring in sterling when the exchange rate tops 70. A friend of mine in the UK has been advising me since i moved here permanently to adopt a policy similar to Sonicdragon and hold savings in a basket of strong currencies. I think with a chimpanzee now running the Exchequer we should all be looking at ways of mitigating the risk of Sterlings decline.

Cheers BB

[sonicdragon]

The pound is going to fall steeply against the Euro next year and will give up most of its gains against the dollar in 2009. The pound wil continue to gain against the dollar in 2008 as a lot of bad things related to what the world does with its existing holdings of dollar denominated assets prevent any kind of recovery.

I know this is about the pound, but I am very curious to know where you think USD-EUR will go, on the basis of sterling falling steeply against the euro and strengthening against the dollar... ?

Edited November 29, 2007 by sonicdragon

[BalthazarBeefheart]

I have been looking at a number of currencies to switch my savings into and note sterling has fallen around 6% since July. I think this trend will continue next year as UK is in for a tough time - am I correct in assuming it is dollar weakness that has kept the GBP/THB rate hovering around 70BHT ?

Many Thanks BB

[chiang mai]

I have been looking at a number of currencies to switch my savings into and note sterling has fallen around 6% since July. I think this trend will continue next year as UK is in for a tough time - am I correct in assuming it is dollar weakness that has kept the GBP/THB rate hovering around 70BHT ?

Many Thanks BB

Whilst GBP/Euro has lost 6% since July GBP/USD has gained substantially this year. The factors that influence the GBP/THB pair are in part the weakness of USD although there must be other reasons and perhaps someone can explain what those are?

[Naam]

The pound is going to fall steeply against the Euro next year and will give up most of its gains against the dollar in 2009. The pound wil continue to gain against the dollar in 2008 as a lot of bad things related to what the world does with its existing holdings of dollar denominated assets prevent any kind of recovery.

we ignorants would be completely lost without reliable prophecies

[Prakanong]

The pound is going to fall steeply against the Euro next year and will give up most of its gains against the dollar in 2009. The pound wil continue to gain against the dollar in 2008 as a lot of bad things related to what the world does with its existing holdings of dollar denominated assets prevent any kind of recovery.

we ignorants would be completely lost without reliable prophecies

I particularly liked this bit "The idiot Brown has generated a huge deficit through the longest period of growth in British history"

Guess he is against economic growth

[chiang mai]

The pound is going to fall steeply against the Euro next year and will give up most of its gains against the dollar in 2009. The pound wil continue to gain against the dollar in 2008 as a lot of bad things related to what the world does with its existing holdings of dollar denominated assets prevent any kind of recovery.

I know this is about the pound, but I am very curious to know where you think USD-EUR will go, on the basis of sterling falling steeply against the euro and strengthening against the dollar... ?

Par?

[sleepyjohn]

Unless anyone here has inside information or such a great deal of experience and skill in currency evaluation that they consider their opinion better than that of the pros out there I suggest simple diversification.

[chiang mai]

Unless anyone here has inside information or such a great deal of experience and skill in currency evaluation that they consider their opinion better than that of the pros out there I suggest simple diversification.

Into?

[chiang mai]

Unless anyone here has inside information or such a great deal of experience and skill in currency evaluation that they consider their opinion better than that of the pros out there I suggest simple diversification.

Into?

dustbin lids, quarts of som tam, anyone??

[sonicdragon]

Unless anyone here has inside information or such a great deal of experience and skill in currency evaluation that they consider their opinion better than that of the pros out there I suggest simple diversification.

Into?

dustbin lids, quarts of som tam, anyone??

Personally I favour SGD, CHF and CNY at the moment.

[up-country_sinclair]

how are you buying cny?

Edited December 4, 2007 by up-country_sinclair

[sonicdragon]

how are you buying cny?

Same as most other currencies - I just call my bank - either Wing Hang Bank or Citibank (both in HK).

[chiang mai]

how are you buying cny?

Same as most other currencies - I just call my bank - either Wing Hang Bank or Citibank (both in HK).

Thanks for that - UpcountrySinclair, you can also buy CNY through HSBC HK's multi currency or Premier accounts easily.

[sonicdragon]

how are you buying cny?

Same as most other currencies - I just call my bank - either Wing Hang Bank or Citibank (both in HK).

Thanks for that - UpcountrySinclair, you can also buy CNY through HSBC HK's multi currency or Premier accounts easily.

In general all banks in Hong Kong offer multi-currency accounts that include CNY, however please note that there are restrictions on the amount of CNY that you can buy/sell in Hong Kong (currenctly 20,000RMB) and there is no bank-to-bank payment system in CNY.

[up-country_sinclair]

i wish their was a CNY currency etf.

this has probably been addressed on another thread, but is it possible to open a multi-currency account at one of these banks over the internet?

[chiang mai]

i wish their was a CNY currency etf.

this has probably been addressed on another thread, but is it possible to open a multi-currency account at one of these banks over the internet?

Almost impossible these days to fully open a new bank account over the internet alone - regulations about proof of ID rules I'm afraid.

[sonicdragon]

i wish their was a CNY currency etf.

this has probably been addressed on another thread, but is it possible to open a multi-currency account at one of these banks over the internet?

Almost impossible these days to fully open a new bank account over the internet alone - regulations about proof of ID rules I'm afraid.

Notarised copies of ID documents should be acceptable to many banks, and in the case if Citibank, if you are a customer already in Thailand, they will confirm your ID for account opening in Hong Kong (I did this when I opened my account with Citi in Australia).

[lannarebirth]

If the linked chart displays properly, you will see that in the last 6 instances, each time the GBP has touched it's lower trendline and 30 week moving average, as it is now, it has bounced and proceeded to higher highs. This is possible, even now, though it will remain a bearish pattern. Should it fail to repeat this past strength here, and closes the week beneath these levels, one would expect 1.90 is not too long away. Then 1.65 further out and perhaps lower as the monthly chart suggest.

http://stockcharts.com/h-sc/ui?s=$XBP...&a=48806132

http://www.eyield.co.uk/myarea/introductio...ng_triangle.htm

[chiang mai]

If the linked chart displays properly, you will see that in the last 6 instances, each time the GBP has touched it's lower trendline and 30 week moving average, as it is now, it has bounced and proceeded to higher highs. This is possible, even now, though it will remain a bearish pattern. Should it fail to repeat this past strength here, and closes the week beneath these levels, one would expect 1.90 is not too long away. Then 1.65 further out and perhaps lower as the monthly chart suggest.

http://stockcharts.com/h-sc/ui?s=$XBP...&a=48806132

http://www.eyield.co.uk/myarea/introductio...ng_triangle.htm

The charts don't lie, according to the morning news.

[BalthazarBeefheart]

If the linked chart displays properly, you will see that in the last 6 instances, each time the GBP has touched it's lower trendline and 30 week moving average, as it is now, it has bounced and proceeded to higher highs. This is possible, even now, though it will remain a bearish pattern. Should it fail to repeat this past strength here, and closes the week beneath these levels, one would expect 1.90 is not too long away. Then 1.65 further out and perhaps lower as the monthly chart suggest.

http://stockcharts.com/h-sc/ui?s=$XBP...&a=48806132

http://www.eyield.co.uk/myarea/introductio...ng_triangle.htm

The charts don't lie, according to the morning news.

Well its the news that comes from the MPC later today that matters - this correction is just pricing in a 25bp cut in interest rates. By the way can anyone tell me the exchange spread the banks mentioned previously here have.

Cheers BB