Further Gbp Falls?

[Abrak]

I am only half joking - IMO it is very dangerous for the world to be reliant on just one currency for global trade. I note that others are jockeying for position to take over this function. IMO the reason they are not making more headway is because it will simply repeat the same mistake.

If I were to take a guess I would say we will see a slow unwinding as the USD moves to be just another currency in the world market - with whatever consequences that would bring.

Ok I am with you and agree. However, the biggest structural problem is this.

If you have a world reserve currency you should only allow another country to peg to you (especially a large one) if they have free capital controls. If not, their peg is not subject to market forces and they can peg whenever at whatever rate they please. In fact theoretically they actually control the peg because freedom to pick your peg at whatever rate rate actually determines everyone elses rate through capital movements. So ultimately a closed economy controls open economies.

If you wish to have a closed capital account you should have an independent currency so that adjustments should take place through it.

Having a currency peg and a closed capital account is simply illogical. China can DEVALUE 30% tomorrow or next year if it likes. But what would be the consequencies - well as they are not subject to market forces then people might feel welcome to adjust their exchange rate through tarrifs or simply copy them and have exchange controls.

So the dependence on a world currency is not a problem, it is the two equally opposite largest economies in the world being pegged while one has a closed capital account that is the root cause.

[pkrv]

I am only half joking - IMO it is very dangerous for the world to be reliant on just one currency for global trade. I note that others are jockeying for position to take over this function. IMO the reason they are not making more headway is because it will simply repeat the same mistake.

If I were to take a guess I would say we will see a slow unwinding as the USD moves to be just another currency in the world market - with whatever consequences that would bring.

Ok I am with you and agree. However, the biggest structural problem is this.

If you have a world reserve currency you should only allow another country to peg to you (especially a large one) if they have free capital controls. If not, their peg is not subject to market forces and they can peg whenever at whatever rate they please. In fact theoretically they actually control the peg because freedom to pick your peg at whatever rate rate actually determines everyone elses rate through capital movements. So ultimately a closed economy controls open economies.

If you wish to have a closed capital account you should have an independent currency so that adjustments should take place through it.

Having a currency peg and a closed capital account is simply illogical. China can DEVALUE 30% tomorrow or next year if it likes. But what would be the consequencies - well as they are not subject to market forces then people might feel welcome to adjust their exchange rate through tarrifs or simply copy them and have exchange controls.

So the dependence on a world currency is not a problem, it is the two equally opposite largest economies in the world being pegged while one has a closed capital account that is the root cause.

I agree with your analysis - However not with the bit in red. Essentially two countries are at war, it is just undeclared. It is IMO in no one else's interests to let either win. I can just see the arguments now. "Better the devil you know" (Christian country) "than the devil you don't" (non Christian country).

Being UK based and a secular country - these are of course both foreign devils

Edited December 2, 2009 by pkrv

[Abrak]

I agree with your analysis - However not with the bit in red. Essentially two countries are at war, it is just undeclared. It is IMO in no one else's interests to let either win. I can just see the arguments now. "Better the devil you know" (Christian country) "than the devil you don't" (non Christian country).

Being UK based and a secular country - these are of course both foreign devils

Actually they are not at 'war' - it is more a dialectic. They are now involved in a relationship that is mutually destructive to themselves and the global economy. Things will change or they will change under duress.

Actually that is far too obtuse or pretentious whatever. What I mean is that there doesnt have to be a winner and a loser, they simply need to reassess their relationship in a mutually beneficial way.

Edited December 2, 2009 by Abrak

[pkrv]

I agree with your analysis - However not with the bit in red. Essentially two countries are at war, it is just undeclared. It is IMO in no one else's interests to let either win. I can just see the arguments now. "Better the devil you know" (Christian country) "than the devil you don't" (non Christian country).

Being UK based and a secular country - these are of course both foreign devils

Actually they are not at 'war' - it is more a dialectic. They are now involved in a relationship that is mutually destructive to themselves and the global economy. Things will change or they will change under duress.

Actually that is far too obtuse or pretentious whatever. What I mean is that there doesnt have to be a winner and a loser, they simply need to reassess their relationship in a mutually beneficial way.

dialectic - I had to look that one up - And IMO that's a good thing, makes you grow. Joint suicide pact comes to mind.

[mommysboy]

What a nutty posting, but could we really expect any different?

[chiang mai]

Back again I see, nothing better to do in the UK!

[pkrv]

The tussle between the US and China for world reserve currency status is a major component of thought processes for other currencies including GBP. However that said

1) I would not wish either to win.

2) I think to defuse the situation will be an iterative and protracted process.

3) I don't think the outcome for either the US or China would be great.

4) For the global economy I think no longer having a world reserve currency would be a great thing. Just spend your own currency.

[mommysboy]

Back again I see, nothing better to do in the UK!

I'm sure I would have something better to do in the UK if I actually lived there!

Yes, back, having had 6 stunning weeks of business, mainly due to a very brisk UK economy. US very fragile, Euroland very subdued.

See you're banging the same old drum then!

So once again, they are all in the mire mate!

[badge]

The tussle between the US and China for world reserve currency status is a major component of thought processes for other currencies including GBP.

However that said

1) I would not wish either to win.

2) I think to defuse the situation will be an iterative and protracted process.

3) I don't think the outcome for either the US or China would be great.

4) For the global economy I think no longer having a world reserve currency would be a great thing. Just spend your own currency.

[...]

Theres no tussle; CNY could never become a global reserve currency, to even consider the notion is pointless.

CNY needs to allow their curency to float freely.

I imagine they wont do this for quite a few years.

[kosh]

Silly reply - What would happen if silly people took it into their head to just 'eject' sorry sell USD, and use their own currency instead, which of course they currently can't at global level.

To be honest I dont know to what extent you are joking in every bit of the sentence or just part.

The euro is fine, the queue to join it will get longer....

[chiang mai]

GBP has fallen by 3 cents in as many days on the back of the unemployment numbers, will it maintain direction I wonder.

[badge]

GBP has fallen by 3 cents in as many days on the back of the unemployment numbers, will it maintain direction I wonder.

You mean against the USD presumably?

With a sensibly researched basket of currencies its a zero sum game. Wealth Preservation

[chiang mai]

GBP has fallen by 3 cents in as many days on the back of the unemployment numbers, will it maintain direction I wonder.

You mean against the USD presumably?

With a sensibly researched basket of currencies its a zero sum game. Wealth Preservation

Again, agreed, and yes I do mean against USD. But whilst I always have my eye on the wealth preservation side of things I occasionally let my gaze wander towards the profit making side - in this respect the GBP/USD pair seem suited to both sides of the equation given that I see a USD bounce in 2010 whilst I see no upwards movement in GBP for the foreseeable future.

[chiang mai]

And as an aside, watch GBP sink now following the budget speech, absolutely dreadful.

[pkrv]

The tussle between the US and China for world reserve currency status is a major component of thought processes for other currencies including GBP.

However that said

1) I would not wish either to win.

2) I think to defuse the situation will be an iterative and protracted process.

3) I don't think the outcome for either the US or China would be great.

4) For the global economy I think no longer having a world reserve currency would be a great thing. Just spend your own currency.

[...]

Theres no tussle; CNY could never become a global reserve currency, to even consider the notion is pointless.

CNY needs to allow their curency to float freely.

I imagine they wont do this for quite a few years.

Quite The two currencies are pinned, however you take that.

[sunnymarky]

Some on here, usually Americans , are quick to say the British pound is in such decline while not facing up to the decline of the US Dollar. as the US government debt spirals and will continue to so with the present administration spending(health care wars and other Pork barrel junk)and the FEderal reserve printing money and the Chinese government the only overseas government that buys US bonds to save the Dollar because it needs to sell so many goods to the USA(for the moment), dont be so confident. There are many economists , some of them American , who say the dollar is in long term decline and when OPEC countries decide not to sell their oil in US$ then it will be the beginning of the end.

Old saying about looking in the mirror before youmake judgement on others.

Edited December 9, 2009 by sunnymarky

[lannarebirth]

Some on here, usually Americans , are quick to say the British pound is in such decline while not facing up to the decline of the US Dollar. as the US government debt spirals and will continue to so with the present administration spending(health care wars and other Pork barrel junk)and the FEderal reserve printing money and the Chinese government the only overseas government that buys US bonds to save the Dollar because it needs to sell so many goods to the USA(for the moment), dont be so confident. There are many economists , some of them American , who say the dollar is in long term decline and when OPEC countries decide not to sell their oil in US$ then it will be the beginning of the end.

Old saying about looking in the mirror before youmake judgement on others.

It's all pretty ugly isn't it?

http://www.chartsrus.com/chart.php?image=h...hp?ticker=FUTDX

http://www.chartsrus.com/chart.php?image=h...hp?ticker=FUTBP

[chiang mai]

I do agree that both GBP and USD look far from healthy but my focus at present is on GBP as it relates to THB hence I tend to compare the relative strength and future of the GBP/USD pair. Within that context I say that GBP will now continue to fall simply because the pre budget announcements have made it clear that the current government is not prepared to do anything to reduce debt until 2011 and markets will not view that in a positive light. Whilst that might be the correct thing to tackle the recession it doesn't demonstrate to the investment community that there is a plan to reduce the debt pile. In light of those things it's easy for me to imagine that GBP/THB may go sub 50 yet again.

[mommysboy]

Yes that pre - budget statement is a joke. Uk has to face up to spending freeze, pay freeze and longer hours, and higher taxes, and benefits cut. You cut your cloth!

[mahtin]

The euro is fine, the queue to join it will get longer....

When you posted that last Friday it was 49.2, and today, one week later, 48.1.

Just as I was setting up transfer of the 800,000B I need to show in Thai bank for retirement.

[chiang mai]

This is an odd (risky) time of the year to get involved in forex because there are so many unusual factors that come into play that seem to distort the market. Having said that, the reason you saw less Euro's when you exchanged was because USD has strengthened and I'm betting that trend will continue, particularly against GBP which in my view has only one direction to go. I'm looking at GBP/USD at 1.50 or better within three months and with the alternative being 2.8% in a tracker account, it's not that difficult of a decision to make.

[chiang mai]

Sadly, GBP/USD looks like it broke the 1.60 barrier, on it's way down. Merry Xmas!

[12DrinkMore]

Sadly, GBP/USD looks like it broke the 1.60 barrier, on it's way down. Merry Xmas!

What was it our cyclops Brown jeered at?

"a weak currency is a sign of a weak government"

This weak government have now screwed it up for the next decade and indeed the next generation. May Brown rot in the stuff of the same colour as his name.

[churchill]

British Pound GBP Forecast 2010 Targets Drop to Below £/$1.40

http://www.marketoracle.co.uk/Article16071.html

[pjclark1]

Hifx are offering 53.29 bht to the pound today

When I cam to Thailand In Jan 2009 it was 45 bht to the pound

In the summer it jumped to 55bht to the pound.

All this talk about gains and drop, what is it all about??

Looks up on the year to me by 18%

[Naam]

British Pound GBP Forecast 2010 Targets Drop to Below £/$1.40

http://www.marketoracle.co.uk/Article16071.html

quoting marketoracle: Nov 29, 2009 - 07:31 PM " We repeat get your cash values out of life insurance policies and annuities. They are invested 80% in stocks and 20% in bonds. Keep only enough money in banks for three months of operating expenses, six months for businesses. Major and semi-major banks are being told to obtain secure storage for new currency-dollars. They expect official devaluation by the end of the year. We do not know what the exchange rate will be, but as we have stated previously we expect three old dollars to be traded for one new dollar."

http://www.marketoracle.co.uk/Article15412.html

facit: marketoracle = bullshit²!

[Naam]

Sadly, GBP/USD looks like it broke the 1.60 barrier, on it's way down. Merry Xmas!

What was it our cyclops Brown jeered at? "a weak currency is a sign of a weak government" This weak government have now screwed it up for the next decade and indeed the next generation. May Brown rot in the stuff of the same colour as his name.

are you trying to tell us that the chinese government is a weak one?

[Naam]

All this talk about gains and drop, what is it all about??

it's talk