Weekly Currency Note: 14th October 2005

Dear Charles,

Weekly currency note: 14th October 2005

Overview

A period of consolidation with sterling making slight
gains during the week. We wait to see if sterling can
make further advances. Inflation versus economic downturn
is the conundrum that policy makers in different countries
are trying to deal with. Which is the greater danger? As
ever, time will tell.

Why is currency management so important?

Another horror story from a new client. He got taken to the
cleaners by his high street bank. He was purchasing in local
currency the equivalent of £50,000 and effectively paid 5%
more than he needed to. In simple terms he “lost” £2,500
which probably made a nice commission for the bank manager.

Open an account today by calling me on 0870 285 0364 or fill
out our online quotation form
at: http://www.smartcurrencyexchange.com/smartquotation.htm

The Euro vs. the £

The Euro started the week at 1.453ish and is currently 1.464ish.
A slight rebound in Sterling although it did spend a lot of
time under 1.46.

Even more poor UK economic data was announced during the week.
However, the Bank of England is still circumspect when talking
about possible interest rate cuts given the spectre of
increasing inflation.

Inflation is also increasing in Euro land which raises the
very real possibility of higher interest rates from the current
2% bank rate.

There has been no clear trend in the Euro/sterling exchange rate
for the last few months - just a broad trading range of 1.44 to
1.50. We are currently in the bottom half of this trading range
with the Euro having the upper hand. If time allows you, you
should try and secure an exchange rate if buying Euros in the
top half and if selling Euros in the bottom half.

Just so you know, currencies such as the Cypriot £ and the
Hungarian Forint, which are planning to move to the Euro in
due course, are closely aligned to the Euro. Therefore they
tend to “track” the Euro. Sometimes they do have a life of
their own but they do tend to come back into line sooner
rather than later.

If you need to BUY or SELL EUROS now is a good time to discuss
your options, so call me on 0870 285 0364 or fill out our online
quotation form
at: http://www.smartcurrencyexchange.com/smartquotation.htm

The US$ vs. the £

Last week it was 1.761.It is now 1.769. A period of consolidation.

The US economy does not seem to have been unduly affected by
Hurricane Katrina and inflation seems to be the major concern.
Further interest rate increases are expected further supporting
the US$.

US$1.73ish is a key level and we wait to see if it can breach
this level and strengthen further, stabilise at this sort of
level or begin to weaken as other fundamentals [i.e. the twin
deficits take control].

The Dirham and the US$ are closely tied. Therefore as the US$
moves so does the Dirham.

If you need to BUY or SELL USD, call me on 0870 285 0364 to
discuss your options or fill out our online quotation form
at: http://www.smartcurrencyexchange.com/smartquotation.htm

The Aus $ vs. the £

The Aus$ has weakened slightly over the week from 2.32 to 2.35ish
but overall the Aus $ is in a strengthening trend.

The Aus$ hit a high of 2.27ish late July. Having hit 2.40 a few
weeks ago it is retesting the July level. We wait to see if it
is able to strengthen even further and beat the July high.

If you need to BUY or SELL Australian Dollars, call me on
0870 285 0364 to discuss your options or or fill out our online
quotation form
at: http://www.smartcurrencyexchange.com/smartquotation.htm

The Can$ vs. the £

The Can$ moved from 2.065 at the start of the week to 2.10 at the
end. The Can$ is very strong at the moment. Justifiably so as the
economy seems to be booming and its commodities are in much demand
[and I talk to a lot of people who are emigrating to Canada].

Over the last few months the Can$ has strengthened by 10% plus.
At the end of April it was 2.35ish. The current level “is very
significant” and for the Can$ to strengthen further will take some
effort. However, if it does so then we could see a very rapid
appreciation.

History would still favour a return in the Can$ to 2.20 plus but
timescales are difficult if not impossible to estimate!

If you need to BUY or SELL Canadian Dollars, call me on
0870 285 0364 to discuss your options or fill out our online
quotation form
at: http://www.smartcurrencyexchange.com/smartquotation.htm

If you would like to discuss a currency not mentioned in this note,
the latest movements, secure an exchange rate or discuss your
particular situation, please feel free to contact me on 0870 285 0364

Lastly, we’re always working to improve the service provided by
Smart Currency Exchange, so if I can produce information in a
better format or make it easier to understand, of if you want
me to clarify what a particular term means, please send me your
questions, suggestions and/or
comments to Charles@SmartCurrencyExchange.com

Think Smart,

Charles Purdy
Director

Phone: 0870 285 0364
Fax: 0870 285 0365
http://www.SmartCurrencyExchange.com

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Disclaimer

As ever these are my musing as to how I see the various
markets going. They should not be taken as fact. The market
does what it wants to do. I have no crystal ball and as ever
I recommend 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 pain!

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