Bad News For Sterling

[lannarebirth]

On Friday 8/08/08, the GBP was fetching almost 67 Baht...

Within two trading days, it's dropped back to 64.2, and still falling... (12/08/08).

I wouldn't be transferring any large sums until it's risen again...

Before it's further likely decline, it's going to 1.85 vs USD. How high do you see it bouncing from there?

[libya 115]

On Friday 8/08/08, the GBP was fetching almost 67 Baht...

Within two trading days, it's dropped back to 64.2, and still falling... (12/08/08).

I wouldn't be transferring any large sums until it's risen again...

Before it's further likely decline, it's going to 1.85 vs USD. How high do you see it bouncing from there?

Am I alone in keeping a close eye on the GBP: US$ exchange rate rather than the THB? I do not trust the THB for one moment. Political instability, the worldwide credit-crunch etc.

I am amazed when expats get a big 'high' from a 70 Baht: 1 GBP exchange rate and sink into depression when it hits 60.

Inflation in the UK now has hit a high; so saving money at 6.5% tax-free is just breaking even.

It would be wise for most people worried about the Thai Baht to stockpile canned food goods, rice, toilet rolls and shampoo, along with Chang beer and invest in a deep freezer. Just what is the inflation rate in Thailand?

If your monthly living expenses in Thailand are 50,000 baht then the difference between 60 Baht=1 GBP and 70 Baht= 1 GBP is 120 GBP per month (4 GBP per day).

[HAPPYCHAPPIE]

Correct on all points. Best to have the funds available to Nationwide on the same day you agree the rate of exchange with them (amounts under £20k whatever the going rate is at the time, larger amounts allow you to negotiate a slightly better rate.) Account can be operated over the net if required.

Nationwide International will give you a euro/sterling or US dollar account.

OFFSHORE.HSBC.COM will open accounts in those but also many other currencies, AUDollar, JAP Yen. Swiss Franc, Hong Kong Dollar etc etc.

It can all be done on the internet and monitored and adjusted whenever you like.

HSBC also enables you to see the value of your total holdings calculated and expressed in your home currency (euro/USD/sterling) by simply clicking 'Show Net Worth'.

Its not designed for trading but rather to hold your cash savings in various currencies, which is what is being suggested above to mitigate exchange rate movements.

My own experience is that movements tend to cancel each other out and how well you do depends on which currency you regard as your home currency.

[12DrinkMore]

OFFSHORE.HSBC.COM will open accounts in those but also many other currencies, AUDollar, JAP Yen. Swiss Franc, Hong Kong Dollar etc etc.

HSBC offer extremely poor interest rates for savers.

The "Offshore Bank" Account offer an incredible 1.10000% (Yes, they give it to five decimal places) if you are nice enough to give them 50,000 Quid. And for the "Serious Saver" Account (I kid you not) they will reward you with 3.50000%.

Any bank with a "Serious Saver" account can't be taken seriously.

Long term deposits are also 25-30% below the best rates on the market.

Wonder where they get their depositors from?

[HAPPYCHAPPIE]

OFFSHORE.HSBC.COM will open accounts in those but also many other currencies, AUDollar, JAP Yen. Swiss Franc, Hong Kong Dollar etc etc.

HSBC offer extremely poor interest rates for savers.

The "Offshore Bank" Account offer an incredible 1.10000% (Yes, they give it to five decimal places) if you are nice enough to give them 50,000 Quid. And for the "Serious Saver" Account (I kid you not) they will reward you with 3.50000%.

Any bank with a "Serious Saver" account can't be taken seriously.

Long term deposits are also 25-30% below the best rates on the market.

Wonder where they get their depositors from?

I will take your word for it but the online savings accounts rather than cheque accounts offer 5% for sterling, 1.9% US$ and 4.16 Euro deposits. I agree that the Serious Saver account needs renaming....

They often give special bonus rates for new accounts and Premier Customers with 60,000 sterling deposited also get higher rates.

Other currency rates vary as you would expect...eg Australian Dollar 5.12%.

The difference between HSBC rates and the best on the market possibly reflect risk and convenience factors.

HSBC is a worldwide operation with many benefits accruing from that.

Some of the high interest paying institutions are smaller less secure enterprises.

If the intention is to try and mitigate currency movements then a percentage point of annual interest may not be that significant. The pound /dollar/ euro values have moved more than that in days recently.

The site is complicated but so are HSBC's multitude of product offerings. Its worth persevering with IMO.

Nationwide International offer a rather more limited product range possibly aimed at a slightly different customer profile and incidentally NWI banks with HSBC.

[Tafia]

God Bless the Civil Service and Index Linked Pensions

[VegasVic]

Ill explain:

Using date from this economics website comparing US average income to British average income:

If I had some crayons I'd draw it out for you...

no need to draw anything out for me Mattchu9999. average incomes are completely irrelevant and deceiving for "real" comparisons. what would you say if i tell you that the average income of the persons living in my house is higher than 50,000 dollars per year? that statement is correct! but if you ask our house maid or her husband the gardener/handyman what do you expect they'll tell you?

LOL WHAT?

Are you serious? Your not comprehending what I am writing.

Im not concerned with the SPECIFIC average income of one profession to another. Rather I am comparing similar average incomes as they differ between Brittan and the US and applying those averages to what their conversion rate is into Bhat.

I am correct in my asertation that even accounting for the differences in "average" or "median" wage earned between the two countries a person earning a "median" average wage in Brittan while statistically less that the US, if two "median" wage earners from each country go on vacation in Tahiland, the simple FACT is, the Britt will get a more favorable exchange rate than the American while they may hold similar poritions in the workforce in their respective countries.

On the basis of what you have written, are you also upset that your 100 USD only buys you around £51 whilst my 100 GBP buys me a whopping $195?

You better make that $189 as of today Sterling is on a downward bias (as is the Euro and Yen) vs. the Dollar, where the bottom will eventually be is anyones guess. I have seen projections of $1.65 within the next 12 months, but a great deal depends on if the FED starts increasing rates later this year and of course just how bad then economic downturn and real estate crisis gets in Brittan. I think its likely that Goldman Sachs forecast for the pound earlier this year will turn out to be pretty accurate, by the way they were predicting the pound to hit the low $1.80's vs. the Dollar by years end! Of course I think the real question here is what will the pound will do vs. the baht over the coming year. The BOT have got their fingers in the dyke right now trying to prop up the baht, but eventually the baht will slide, so I guess the real question is will the baht slide more than the pound (or visa versa). Should the baht and the pound slide equally vs. the Dollar then Britt expats in the LOS will likely get a rate close to todays rate, somewhere in the low to mid 60's!

[lannarebirth]

On Friday 8/08/08, the GBP was fetching almost 67 Baht...

Within two trading days, it's dropped back to 64.2, and still falling... (12/08/08).

I wouldn't be transferring any large sums until it's risen again...

So not today then?

http://finance.yahoo.com/q/bc?s=GBPTHB=X&a...l&q=l&c=

[Naam]

On Friday 8/08/08, the GBP was fetching almost 67 Baht...

Within two trading days, it's dropped back to 64.2, and still falling... (12/08/08).

I wouldn't be transferring any large sums until it's risen again...

So not today then?

and neither tomorrow.

[Martian]

It's all apples vs. apples when it comes to exchange rates, that's why they are what they are, except when someone like China defies the rules and "pegs" their currency. The only thing I am concerned about is what is my disposable income/buying power where I am living now and what will my disposable income/buying power be where I want to live in the future. I.E. mostly related to inflation.

I don't care what the dollar exchange rate is at the moment because I live within the USA just as I wouldn't care what the Baht was doing if I were living in Thailand and earning Baht because I am living within that economic "ecosystem". What I do care about is at what point (exchange rate) do I move my dollars into my Thai bank account for retirement visa purposes in the future. About 4 years ago 800,000 Baht would cost me $20,000 USD. At this moment it will take about $24,000 USD.

Of course, I believe the USD is going to strengthen over the next couple of years and hit 36 - 38 Baht and maybe an outside chance of 40 Baht in the longer time frame and the interest I am earning in the USA, albeit maybe not that much more than the inflation rate, is certainly better than the .75% savings account interest in Thailand so holding out for the rise of the dollar is the thing for me to do because even if it does decline somewhat, I will still have earned more interest to cover the decline and I am only concerned about meeting retirement visa requirements and not making income from currency trading.

Anyway, the USD will be back or the whole of the world will be trashed, that's the way it is. Globalization or not, if the USA sneezes, the rest of the world gets a cold. The Saudis recognize this and now the European financial gurus are stumbling about trying to cover their butts over not recognizing the affects of the US economy upon their own and are now behind the curve. The Euro is in for a steady decline as more and more information about the European economy finally comes out.

Everyone should be hoping for a big and vibrant economic upturn for the USA because it is best for the world as a whole.

This is my belief and its coming from a person who just had his job taken away after 22 years of loyal service because of the economy.

Best Regards and hopes for everyone to economically flourish going forward,

Martian

[VegasVic]

Ill explain:

Using date from this economics website comparing US average income to British average income:

If I had some crayons I'd draw it out for you...

no need to draw anything out for me Mattchu9999. average incomes are completely irrelevant and deceiving for "real" comparisons. what would you say if i tell you that the average income of the persons living in my house is higher than 50,000 dollars per year? that statement is correct! but if you ask our house maid or her husband the gardener/handyman what do you expect they'll tell you?

LOL WHAT?

Are you serious? Your not comprehending what I am writing.

Im not concerned with the SPECIFIC average income of one profession to another. Rather I am comparing similar average incomes as they differ between Brittan and the US and applying those averages to what their conversion rate is into Bhat.

I am correct in my asertation that even accounting for the differences in "average" or "median" wage earned between the two countries a person earning a "median" average wage in Brittan while statistically less that the US, if two "median" wage earners from each country go on vacation in Tahiland, the simple FACT is, the Britt will get a more favorable exchange rate than the American while they may hold similar poritions in the workforce in their respective countries.

On the basis of what you have written, are you also upset that your 100 USD only buys you around £51 whilst my 100 GBP buys me a whopping $195?

Another update as of the market close today, those 100 GBP will get you $186 now I wonder what 100 GBP will get you 6 months from now after the FED starts raising rates A weakening pound is actually the very thing that GB needs right now, it will give the Britt export sector a shot in the arm, and help moderate the increasing unemployment in GB!

[jimbob]

Another update as of the market close today, those 100 GBP will get you $186 now I wonder what 100 GBP will get you 6 months from now after the FED starts raising rates

Does anybody have a prediction on pound versus dollar in the next 6 months?

Will the pound recover or the dollar dominate?

[Naam]

Another update as of the market close today, those 100 GBP will get you $186 now I wonder what 100 GBP will get you 6 months from now after the FED starts raising rates

Does anybody have a prediction on pound versus dollar in the next 6 months? Will the pound recover or the dollar dominate?

http://www.freefoto.com/images/11/12/11_12_64---Dice_web.jpg

[chiang mai]

Another update as of the market close today, those 100 GBP will get you $186 now I wonder what 100 GBP will get you 6 months from now after the FED starts raising rates

Does anybody have a prediction on pound versus dollar in the next 6 months?

Will the pound recover or the dollar dominate?

I predict that GBP/USD will be sub 1.80 in six months and that GBP/THB will be sub 60 in the same time frame.

[Marvo]

I predict that GBP/USD will be sub 1.80 in six months and that GBP/THB will be sub 60 in the same time frame.

I wish you could have told me that a month ago.

[chiang mai]

I predict that GBP/USD will be sub 1.80 in six months and that GBP/THB will be sub 60 in the same time frame.

I wish you could have told me that a month ago.

Er, um, I did!

Actually, I'm now revising my forecast and reckon that GBP/USD will see 1.75 before year end and 1.50 some time next year - THB should see sub 60 before too long.

[naklang]

The world just became quite a bit more dangerous, particularly to Europe. Dollar rally/Sterling decline is combination of reversals, one of which is a flight to "safety". At the end of the day, firepower has to do the talking. Just the way the world has always been unfortunately.

Edited August 15, 2008 by naklang

[chiang mai]

The world just became quite a bit more dangerous, particularly to Europe. Dollar rally/Sterling decline is combination of reversals, one of which is a flight to "safety". At the end of the day, firepower has to do the talking. Just the way the world has always been unfortunately.

And this load of carp has what to do with the price of beef?

[ray23]

Well guys I don't think it is going to matters much where your from I think we have a rough road ahead. Some of us have already embarked on the trip.

[Naam]

The world just became quite a bit more dangerous, particularly to Europe. Dollar rally/Sterling decline is combination of reversals, one of which is a flight to "safety". At the end of the day, firepower has to do the talking. Just the way the world has always been unfortunately.

And this load of carp has what to do with the price of beef?

beef prices in Thailand are rising because Brits spend less Sterling to cure sick buffaloes. therefore buffaloes die and cannot make boom-boom = no offsprings = slaughter houses empty = shortage of beef = prices up. as simple as that

[m02]

.. With that being said, should my British counterpart wish to travel to LOS and take 1 months salry for spending there at the current conversion rate he would convert $1679 GBP into 110,414.502 THB

For us Yanks, we would convert $2366 USD into 79,556.750 THB.

Mattchu9999 made a rather gross error in his conversion process, and it is quite amusing none of you financial wizards caught it.

Actually $1,679 equals about 840 GBP, which would equal around 55, 450 baht - not 110,414.

Meaning the US average wage earner is ahead by 24,000 baht or so.

Its nice to dream of converting USD to THB at GBP rates but sadly its just a dream, neh? :D

[Chaimai]

[quote name='m02' date='2008-08-17 03:46:13' post='2150252'

Actually $1,679 equals about 840 GBP, which would equal around 55, 450 baht - not 110,414.

Meaning the US average wage earner is ahead by 24,000 baht or so.

The title of this thread has even caught up with you, m02, at 1.86 ish the sterling value is £900 now!

The baht equivalent is pretty much unchanged as the GBP/THB rate mirrors the GBP/USD deterioration.

[naklang]

The world just became quite a bit more dangerous, particularly to Europe. Dollar rally/Sterling decline is combination of reversals, one of which is a flight to "safety". At the end of the day, firepower has to do the talking. Just the way the world has always been unfortunately.

And this load of carp has what to do with the price of beef?

You'll find out soon enough.

[chiang mai]

It's been an interesting week for me at least watching the US Dollar and the Thai Baht. USD was on an upwards run, paused and fell back slightly but once it had caught its breath it charged off again in the same continued direction. The Pound continued its fall against USD and at times matched exactly the rise of the Baht against the Pound - except where the BOT must surely have intervened to prevent the Baht from strengthening too much.

There's no good news coming out of the UK economy and none is likely in the short term so no support there for the Pound/Baht exchange rate. If anything there seems to be increased downside risk to the Pound as the need for interest rate cuts in the UK become more apparent but with inflation at its current level it seems unlikely that anything will happen on that front before the end of the year at the earliest. BOT fears of an overly strong Baht are about the only thing that will keep the Pound this side of 60 and that's going to be an expensive exercise for BOT. Alternatively, an event risk is likely to stem the USD rise soon.

I'm still betting on USD at 1.70/1.75 before year end and THB at sub 60 soon. Still not too late to swap GBP for USD (or something else) but I reckon that staying with GBP once we get close to rate cutting time will be very dangerous, unless you are prepared to ride out the storm and that may take a couple of years. As if to prove the point, I personally am better of today to the tune of Baht 500k by swapping Pounds for USD than I was three weeks ago, that's a lot of money, to me at least.

[Flapman]

I tend to agree with Lannarebirth. I reckon that even if the dollar IS on the bounce its not going to rocket upwards too fast. A little sideways movement and then a slow climb. I have my nestegg in the Nationwide riding on a 1 year bond giving me 6.8 % tax free per annum so 2.5% sounds a bit grim.

Useful postings, many thx. Do you think Nationwide will be a good haven as the UK housing market storm continues? I panicked back in March when there was an attempted raid on HBOS, and it's Credit Default Swap (CDS) rating rose to 244 against perceived debt risk. So I opened a/cs in LloydsTSB (secure?, but lousy int. rates) and HSBC, and moved a fair chunk out of Bank of Scotland Intl (HBOS).

Maybe the banks' bad debt disclosures are past half-way played out / priced in by now? Nothing has collapsed in UK since Northern Rock. I distrust some of those banks that pay really good rates (Nigeria, Iceland etc). Now the guessing seems to have shifted from where to bank, to how to hang on to value across currencies. Any advice welcome on what are the best sources of info for decision making in this area?

[chiang mai]

I tend to agree with Lannarebirth. I reckon that even if the dollar IS on the bounce its not going to rocket upwards too fast. A little sideways movement and then a slow climb. I have my nestegg in the Nationwide riding on a 1 year bond giving me 6.8 % tax free per annum so 2.5% sounds a bit grim.

Useful postings, many thx. Do you think Nationwide will be a good haven as the UK housing market storm continues? I panicked back in March when there was an attempted raid on HBOS, and it's Credit Default Swap (CDS) rating rose to 244 against perceived debt risk. So I opened a/cs in LloydsTSB (secure?, but lousy int. rates) and HSBC, and moved a fair chunk out of Bank of Scotland Intl (HBOS).

Maybe the banks' bad debt disclosures are past half-way played out / priced in by now? Nothing has collapsed in UK since Northern Rock. I distrust some of those banks that pay really good rates (Nigeria, Iceland etc). Now the guessing seems to have shifted from where to bank, to how to hang on to value across currencies. Any advice welcome on what are the best sources of info for decision making in this area?

I'm very comfortable with Nationwide, they are one of the stronger financial institutions around and have done well in recent times as others have come under the spotlight. As for HBOS - I have three bonds remaining with BOSI and Halifax, all part of HBOS, and at times I get nervous I must admit. But since they have a year to run there's little I can do - would I move them if I could, probably not to be honest since they represent less than 10% of my holdings and I reckon it's very unlikely the government would let an institution such as HBOS simply fail completely.

You are correct in saying that the shift is now towards GBP currency value rather than its return. As stated earlier I have swapped into US Dollar at 2.08, 1.97 and 1.95 and have profited nicely over the past three weeks. Even if I don't take the profit and simply hold the Dollars I have a useful hedge against the Thai Baht for the next couple of years at least. I am strongly considering buying further into the USD even though it is currently at 1.84 although this time with a view to holding the USD for the medium term since various forecasts suggest that GBP/USD will eventually head south of 1.50.

Finally, best source for information is a difficult one. For my part I read the FT, Telegraph, Bloomberg and several FX papers plus others daily - occasionally the Economist site carries useful data (their currency exchange map can be helpful in understanding currency impacts). I'm afraid that unless you are a trained FX trader and understand all the angles and dynamics of Forex then it's really pretty much of a crap shoot, with the exception of the obvious moves such as USD/GBP currently. One thing is however certain in my mind and that is that leaving money in GBP currently when your end currency is Thai Baht is a recipe for disaster.