Any end to terrible exchange rate?
Sep 24th, 2005, 07:39 AM
#1
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Any end to terrible exchange rate?
I was in London in May for 10 days. I'm such an anglophile and dying to get back to London but with this exchange rate it really restricts me as far as where I stay, places I visit and any purchases I make. What exactly (economically)causes the US/Pound exchange rate to stay at the level it has been for the past few years? In May I barely got 50-52 cents on the pound. Do any economists see this changing any time soon?
Sep 24th, 2005, 07:52 AM
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There will be no change as long as the current administration continues to borrow billions and cuts taxes. The war in Iraq and the damage to the gulf region have a huge impact on the debt and thus the exchange rate. Don't expect to see anything change in the near future as long as Bush and Congress retain the existing tax cuts and it will only worsen if they approve the proposed tax cuts.
Sep 24th, 2005, 08:01 AM
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Hello linda, I'm by no means an economist but you really brought a smile to my face when I read your post.
How would you react if you had to pay $11.50 for one lousy British Pound?
In USA it's the dollar, Britain the pound, South Africa the Rand. We know what it's like to really cough up the bucks! (And the Rand has improved a great deal - one time I payed almost 20 to 1) Please can I have some of your wonderful dollars?!!LOL
How would you react if you had to pay $11.50 for one lousy British Pound?
In USA it's the dollar, Britain the pound, South Africa the Rand. We know what it's like to really cough up the bucks! (And the Rand has improved a great deal - one time I payed almost 20 to 1) Please can I have some of your wonderful dollars?!!LOL
Sep 24th, 2005, 08:25 AM
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If I remember correctly, there was a thing called Vietnam, which was just winding down. A soaring deficient and roaring Inflation. A bumbling (Republican) president and lackluster Congress. There was also an oil crisis and long fuel lines. You where lucky to get anything for the dollar. No, I don't blame it on Bush, but it seems he's following along the same path, as is the Republican controlled Congress.
Sep 24th, 2005, 08:38 AM
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sorry, but a fairly silly question. I have been to the UK with exchange rates everything from $2.53 / £1 to $1.42 / £1.
The highs and lows have been during both Dem and Rep administrations, high and low(er) deficits and every sort of trade imbalance.
Just this week the £ has fallen several cents. This morning it is down to about $1.77
The highs and lows have been during both Dem and Rep administrations, high and low(er) deficits and every sort of trade imbalance.
Just this week the £ has fallen several cents. This morning it is down to about $1.77
Sep 24th, 2005, 08:45 AM
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There's no simple explanation of the £/$ relationship (known as "cable" by some in the trade). It's a complex mix of prevailing interest rates, the money market's expectations of future interest rates and general market sentiment about economies.
It takes two to make any relationship, and given the London markets' wholly disproportionate influence on foreign exchanges (more money changes hands in currency speculation in London than in the US), cable is often more influenced by traders' perceptions of the British economy than by what they think about the US. Perversely, sterling can strengthen sometimes when the UK markets get unhappy about management of the British economy. Right now, with concern about British inflation, there's some expectation British interest rates will climb - which might create upward pressure on sterling.
Equally, there's a lot of speculation about interest rates coming down, as there's concern about falling consumer demand. So there might be downward pressure on sterling.
And if I've made things clear, then I've massively oversimplified them. If you get two competent economists in a room, you ought to get at least three different forecasts about where cable will be in nine months' time. Britain and the US both have growing fiscal and trading deficits, they're both caused by pretty much the same things, Iraq and all that is really only a small part of the explanation and there's no likelihood either country will have a change of government for another 3/4 years (and, if we're honest, little chance a different government would change the underlying reasons for both economies' problems). So I really wouldn't bet on any real change in cable for a few years. OTOH, I wouldn't be astonished if there were one.
But where's this £1=50c coming from? The mid-market rate is about £1=56c. You might do better to look at where you're getting your sterling from, buy National Trust or English Heritage membership, renting a flat and steering clear of Horrids.
It takes two to make any relationship, and given the London markets' wholly disproportionate influence on foreign exchanges (more money changes hands in currency speculation in London than in the US), cable is often more influenced by traders' perceptions of the British economy than by what they think about the US. Perversely, sterling can strengthen sometimes when the UK markets get unhappy about management of the British economy. Right now, with concern about British inflation, there's some expectation British interest rates will climb - which might create upward pressure on sterling.
Equally, there's a lot of speculation about interest rates coming down, as there's concern about falling consumer demand. So there might be downward pressure on sterling.
And if I've made things clear, then I've massively oversimplified them. If you get two competent economists in a room, you ought to get at least three different forecasts about where cable will be in nine months' time. Britain and the US both have growing fiscal and trading deficits, they're both caused by pretty much the same things, Iraq and all that is really only a small part of the explanation and there's no likelihood either country will have a change of government for another 3/4 years (and, if we're honest, little chance a different government would change the underlying reasons for both economies' problems). So I really wouldn't bet on any real change in cable for a few years. OTOH, I wouldn't be astonished if there were one.
But where's this £1=50c coming from? The mid-market rate is about £1=56c. You might do better to look at where you're getting your sterling from, buy National Trust or English Heritage membership, renting a flat and steering clear of Horrids.
Sep 24th, 2005, 09:11 AM
#11
At the risk of being deemed factual, I suggest that, with the interbank rate = 0.67880 (1 Pound = $1.4742) on 1/19/01, and = 0.56260 (1 Pound = $1.7780) on 9/24/05, we're only talking about a 21% difference here. That's not been an exceptional change during my lifetime of familiarity with exchange rates. I remember once going to Germany in the '70s when the DM was about $0.48, and a year later it was about $0.56 (18%?).
Rather than looking for pegs to hang one's politics on, Robert, you might consider whether another factor could conceivably be affecting currency. For example, might there be a nation whose economy is growing about 12%/year, running a major trade surplus with other major countries? Those Yanks concerned about comparative exchange rates might look introspectively at their personal spending habits: bought any non-US-made electronics/clothes this year? Yes? Guess you contributed to the trade imbalance, and hence the currency degradation. No, I don't see a change soon; indeed, as service and manufacturing jobs shift to the Orient, it will probably drop further.
Rather than looking for pegs to hang one's politics on, Robert, you might consider whether another factor could conceivably be affecting currency. For example, might there be a nation whose economy is growing about 12%/year, running a major trade surplus with other major countries? Those Yanks concerned about comparative exchange rates might look introspectively at their personal spending habits: bought any non-US-made electronics/clothes this year? Yes? Guess you contributed to the trade imbalance, and hence the currency degradation. No, I don't see a change soon; indeed, as service and manufacturing jobs shift to the Orient, it will probably drop further.
Sep 24th, 2005, 09:55 AM
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WHEW!!! Thanks to everyone who responded so quickly to my post. My first trip to London was 1984 and as well as I remember the exchange rate was favorable for the US. With about 6 trips there since 1999 it seems to steadily have gotten worse but in reading your replies it's stands to reason that with the U.S. war involvment and our troubled economy in the last 5 years I guess I can't expect it to be any better. I will continue to save my $$'s for an opportunity to make another trip to my favorite city. When I think about it - the things I love to do most in London is just walking through the various neighborhoods and parks and marvel at the architecture and history. I can really do without the costly things. Maybe I should try one of those home exchange sites. Anyone experienced that before? And to Tod - sorry for my petty moaning. Thanks again for the input.
Sep 24th, 2005, 11:05 AM
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AA: do you also blame Bush for the exchange rate in 1975 when 1BP was almost $2.50?
What are we supposed to do, get down on our knees and thank him for pursuing policies that have continued this trend?
Keep counting your miles...they are evidently quite comforting.
What are we supposed to do, get down on our knees and thank him for pursuing policies that have continued this trend?
Keep counting your miles...they are evidently quite comforting.
Sep 24th, 2005, 11:29 AM
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<b>Intrepid</b>,
It's not only the miles, but my $tock$ are also doing exceptionally well in the last year or so.
I'm not sure what you are reading but the economy is doing very well these days.
It's not only the miles, but my $tock$ are also doing exceptionally well in the last year or so.
I'm not sure what you are reading but the economy is doing very well these days.
Sep 24th, 2005, 12:03 PM
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linda_j: "With about 6 trips there since 1999 it seems to steadily have gotten worse but in reading your replies it's stands to reason that with the U.S. war involvment and our troubled economy in the last 5 years I guess I can't expect it to be any better"
Huh????
The majority of posters said nothing about the war causing the current exchange rates. And "our troubled economy"? - many European countries have far more troubled economies.
robert2533 is the only one saying those sorts of things - and his info is political not financial -- and pretty much wrong.
The exchange rates have NOT gotten steadily worse since your first trip in 1999. They have gone up, and they have gone down, just like they have for decades . . . . .
Huh????
The majority of posters said nothing about the war causing the current exchange rates. And "our troubled economy"? - many European countries have far more troubled economies.
robert2533 is the only one saying those sorts of things - and his info is political not financial -- and pretty much wrong.
The exchange rates have NOT gotten steadily worse since your first trip in 1999. They have gone up, and they have gone down, just like they have for decades . . . . .
Sep 24th, 2005, 12:26 PM
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I'm glad your $tock$ are doing well, mine have stagnated. As long as this dunce thinks we can finance a "war" and have tax cuts and finance the rebuilding of the Gulf coast the exchange rate will suck. I hope China, Japan and S. Korea continue to have faith in our economy.
Like your handle Intrepid, I'm thinking of changing mine to CVA11. My current name reflects the miles I've flown on AA.
Like your handle Intrepid, I'm thinking of changing mine to CVA11. My current name reflects the miles I've flown on AA.
Sep 24th, 2005, 12:38 PM
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Exchange rates ebb and flow. Right now the dollar is about where it should be. American travelers were spoiled 3 or 4 years ago by an unusually strong dollar.
Not that I wouldn't like the dollar to be that strong every time we travel, but I've send all sorts of fluctuations over the past 40 years. It's been worse than it is now several times over that period.
Not that I wouldn't like the dollar to be that strong every time we travel, but I've send all sorts of fluctuations over the past 40 years. It's been worse than it is now several times over that period.
