Dropping like a stone - GBP

[BrilloPad]

You remind me of a two-year old kid looking at some fireworks. He doesn't know how it all works or why but is impressed nevertheless.

So how does it all work? Has some fx trader fallen asleep on the sell button folowing a long lunch? What does it mean for the contract market?

[beaker]

All my assets are in AUD - up about 10% this year against the pound. Daily rate is worth less though, although I'm working on it.

Tay - you need to get your money out of here before it becomes worthless. Interest rates in NZ are about 9% anyway aren't they?

[tay]

Tay - you need to get your money out of here before it becomes worthless. Interest rates in NZ are about 9% anyway aren't they?

We are paying 10.5% on our mortgage in NZ. Thats not the issue, our rents still cover that. The issue is the wedge of cash we want to send home. Over time NZD/GBP has been averaged arund the 3 :1 mark.. now it is at the 2.5 :1 mark.

We are just going to wait and hope that in the next year things go back to normal. Its a bit of a risk, but its a risk either way.

The NZ economy isnt looking great either, just that at the moment monied people are loving our interest rate (as you would), but once that starts going down with house prices... the xchange rate 'might' unwind quickly.... but its a time thing I guess.

[AlfredJPruffock]

We are paying 10.5% on our mortgage in NZ. Thats not the issue, our rents still cover that. The issue is the wedge of cash we want to send home. Over time NZD/GBP has been averaged arund the 3 :1 mark.. now it is at the 2.5 :1 mark.

We are just going to wait and hope that in the next year things go back to normal. Its a bit of a risk, but its a risk either way.

The NZ economy isnt looking great either, just that at the moment monied people are loving our interest rate (as you would), but once that starts going down with house prices... the xchange rate 'might' unwind quickly.... but its a time thing I guess.

If interest rates went down in NZ why would that bring house prices down in its wake ?

In essence any currencies which have strong links to the Greenback are in danger of a sharp correction /markdown - perhaps the UKs best escape would be to join the Euro - whom would argue against that now ?

[rootsnall]

If interest rates went down in NZ why would that bring house prices down in its wake ?

It's the other way round, if house prices start coming down they won't need 9% interest rates to try to stop things overheating.

Tay, I'd hang fire, no reason you can't leave your wad over here, sterling may well weaken further but surely the 9% interest rates in NZ won't last forever.

[milanbenes]

'We are just going to wait and hope that in the next year things go back to normal. Its a bit of a risk'


blimey Tay, isn't that a little hit and hope ?

You really think next year things will go back to normal ?

Milan.

[tay]

If interest rates went down in NZ why would that bring house prices down in its wake ?

No what I wa meaning is that once the high interest rates hit, house prices will dip or stall... infaltionary pressure will ease and interest rates can come down.

Tay, I'd hang fire, no reason you can't leave your wad over here, sterling may well weaken further but surely the 9% interest rates in NZ won't last forever.

Agreed, 18 months is a long time in the financial world, will wait and see.

blimey Tay, isn't that a little hit and hope ?

You really think next year things will go back to normal ?

I think so, I am no money market genius, but the weak NZ dollar is killing our exporters, the high interest rates are killing house owners.. so the economy is in for a major rough time in NZ, so I dont think its a huge risk to assume our exchange rate wont stay strong for more than a year or so.
Its not like I am playing the market based on a theory that it will hit an extreme level, the xchange rate moves between '2.5:1' to '4:1'.. with '3:1' being the 'norm' ... I am just betting on it hitting that rate again in the next year or so. I am not a currency market player by choice... so I dont presume to think I can beat it.

[NoddY]

If your selling your labour for Sterling, this graph ought to be alarming:

http://www.ecb.int/stats/exchange/eu...ph-gbp.en.html

I expect further abuse of the money supply by the Bank of England during 2008.

[tay]

This is the one I follow

http://www.nationalbank.co.nz/econom...ge/nzdgbp.aspx

[Alf W]

Cheap holidays in the States.

Good news for UK exports to Euro land..

How is this bad news?

Who cares if vile cheese, horsemeat, dodgy Euro-fashions and tasteless Spanish tomatoes are more expensive?