Smart Weekly Currency Note - 7th August 2009

Smart Currency Exchange - Weekly Currency Rates

Weekly Currency Interbank Exchange Rates 7th August 2009

Currency Rate Last Week Rate This Week EURO 1.170 1.175 US$ 1.658 1.669 CAN$ 1.793 1.809 AUS$ 2.000 1.990 NZD 2.524 2.479 AED 6.094 6.121 CHF 1.786 1.803 ZAR(Rand) 12.788 13.395   Charles's Thoughts: A strange week for sterling. It all started positively with the purchasing manager indices for both manufacturing and services showing improvement and even indicating expansion as the readings headed over 50. As a result sterling strengthened against most currencies. Come Thursday mid-day it all came to a grinding halt and sterling went into fast reverse. The reason for this was the announcement from the Bank of England that it was going to increase the amount of funds for its quantitative easing programme by £50bn. This came as a complete surprise as the BoE had given the impression that it was likely to keep the programme on hold and if it did continue it would stick within the agreed government limit of £150bn. The increase of £50bn takes the full amount to £175bn. Also the positive economic data that has been released over the last few weeks increased confidence that the worst of the recession was over but this action by the BoE [with their access to more detailed information] indicates that they believe this not to be the case. In fact they have said that the recession was deeper than first thought which is believable as I think a lot of people are still in denial and the recession has along way to run. As I have noted previously it should not be assumed sterling will continue to appreciate as its problems are very serious. In fact the International Monetary Fund has stated that on a purchasing power parity existed basis the correct rate for sterling would be US$1.53/£1. In the US a lot of economic data was released this week. The unemployment figures released on Friday were better than expected and indicated that the US economy was stabilising. Similarly there was a third month of increased factory orders and on the back of this the US$ lost value as risk appetite increased. In fact we saw the US$1.70£1 breached for the first time this year. But following the BoE’s announcement on Thursday we saw a rapid pull back towards the starting level for the week. The European Central Bank met and kept euro land interest rates on hold. They are maintaining their “steady as she goes” approach even though some would argue that they need to do a lot more. I suspect what people forget is that the ECB has been clever in making liquidity available to the banks through their secure lending schemes. In the last one they made available over €400bn which must be helping maintain the banks liquidity and ability to lend. Still there are problems that need to be addressed given the diversity of the € countries but do get the feeling when I watch the ECB Chairman talk that he has a much better understanding than our beloved Chancellor. Commodity currencies continue to benefit from commodity prices being on an upward curve. The Australian dollar continues to be a significant beneficiary managing to break back down through the A$2.0/£1 level. Why is Currency Management So Important? Using a bank could cost you £3-4,000 per £100,000 transferred. Buying at the "wrong" time could cost you many £'000's more as rates can move as much as 3% in a very short period of time. Then add in transfer costs that the banks charge for sending and receiving funds and you could be looking at additional costs of £10,000 per £100,000 transferred. By developing a currency strategy and by working with a specialist currency broker these losses could be minimised if not eliminated. Smart Client Testimonial: "Thank you for making our transactions go so smoothly. As promised, our account was opened within hours. Your traders were pleasant and efficient, and each transaction was very much at the exchange rate I expected...ie not a million miles away from the inter-bank rates and certainly much better than my high street bank could quote. All in all, an easy experience and we will have absolutely no hesitation in recommending your services to any of our friends buying property abroad." Ian Pritchard If you haven't opened a Smart account yet, call me on freephone 0808 163 0102 (+44 0207 898 0541) or fill out our online Account Form at: http://www.SmartCurrencyExchange.com/application.htm How much will a Property Cost? To estimate the cost of a property simply DIVIDE the price of the property by the appropriate rate noted above. But note this is based on the inter bank rate so the actual cost will be slightly more. Charles Purdy Smart Resources Currency Strategy Worksheet Need help creating a Currency Strategy? Download our Currency Strategy Worksheet: http://www.smartcurrencyexchange.com/downloads/CurrencyStrategyWorksheet.pdf Currency Report Have your read our 10-page Currency Report that outlines the top 3 mistakes that overseas buyers make when exchanging and transferring their money overseas? Get the report here: http://www.SmartCurrencyExchange.com/downloads/ThreeMistakes.pdf Currency Quotation Are you interested in a currency rate for Euros, US$'s, CYP, NZD, or any other currency, please fill out our Smart quotation form at: http://www.SmartCurrencyExchange.com/smartquotation.htm Smart Currency Exchange Limited

email: Charles@SmartCurrencyExchange.com free phone: 0808 163 0102 (if calling from outside the UK, please use +44 0207 898 0541) web: http://www.SmartCurrencyExchange.com

Smart Currency Exchange | 1 Lyric Square | Hammersmith | London | W6 0NB | UK © 2005-2009 Copyright  Smart Currency Exchange Ltd THIS PUBLICATION DOES NOT CONSTITUTE ADVICE WITHIN THE TERMS OF THE FINANCIAL SERVICES ACT (OR ANY SUBSEQUENT REVISIONS, ADDITIONS, OR AMENDMENTS). Disclaimer Exchange rates can move very quickly. The above rates are the interbank rates and valid at a moment in time. The interbank rate is the rate at which the banks deal with each other in the foreign exchange markets. Suggestions should not be taken as advice or fact. The market does what it wants to do.  We have no crystal ball and as ever we suggest that if an exchange rate works for your budget then don't try and wait for an even better exchange rate, as Murphy's Law says the rate will go against you and cause you maximum trouble!

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