Matt T

British business sells £80m of goods to Spain

Ah, that explains why Sterling has been so strong today.

Labels: currency speculation, Economcs

posted by Matthew @ 6/11/2009 09:46:00 AM Comments: 0

Devaluation

Oliver makes a few criticisms of this Telegraph article on the euro (Chris Dillow says some aren't important, link somewhere on the right), and I would add another, which seems to be ignored by many right-wing experts on the economy (and bloggers such as Tim Worstall), although used to be widely known, which is not everyone can devalue. The Telegraph says:

The one-size-fits-all inflexibility of the eurozone deprives single currency members of the vital weapons of devaluation

So Spain needs to save its economy by devaluing against Germany, and Germany, whose economy is hardly doing any better, needs to devalue against Spain. Meanwhile the UK and US need to devalue against both, and in turn they need to devalue against the UK and US.

It doesn't take a genius to work out this isn't going to be possibe. Perhaps they could all devalue against China? But China isn't big enough to mean that was a major devaluation for any of them, and in fact China isn't keen on that idea - it's exports are falling too.

In fact, of course, there is kind of one way in which everyone can devalue, and that is through higher inflation - devaluing the currency against the price of goods and services. And deep down perhaps this is what they want -- it's certainly a justifiable position, but not one that used to be made by Conservatives.

Labels: currency speculation, Economcs

posted by Matthew @ 2/01/2009 09:52:00 PM Comments: 1

Old money

Today the pound is at 1.1238, or at least that was the low today. In old money that is:

7.4 francs
2.21 DMs
2,184 lira

Labels: currency speculation

posted by Matthew @ 12/11/2008 05:51:00 PM Comments: 0

Gulp!

0.54 euros to a pound declares the FT!

Sterling lost ground, falling 1.8 per cent to $1.5086 against the dollar and losing 1.6 per cent to £1.8385 against the euro.

Labels: currency speculation

posted by Matthew @ 12/01/2008 12:57:00 PM Comments: 2

Sterling at $1.77

How you all laughed at my currency speculation. But now, my dollar at average rate of about 2.01 are looking good now sterling is at 1.76.

I don't think Alistair Darling has a high reputation as a Chancellor (although I can't really think of anything disastrous he has done), and for that reason this idea hasn't been considered. But when everyone is wondering why he was so candid about Britain's economic outlook, no-one seems to have considered that perhaps it was because he was talking down the pound deliberately?

Labels: currency speculation

posted by Matthew @ 9/03/2008 03:32:00 PM Comments: 0

Currency speculation and Britain's economy

The pound has slipped to around $1.95, which makes my long-running and modest currency speculation firmly in profit (I think mine averages about $2.04).

The pound's fall has been more pronounced against the euro, where a pound now buys only 1.32 euros, its lowest since the single currency's launch in 1999 [1]. Whilst the euro is probably overvalued at these rates worldwide there seems little reason to believe it is going to fall against the pound over the next year. This has prompted a lot of bizarre comments about GDP - last week we had the news (now not true) that the UK had overtaken the US in GDP per capita, and now we have the news that the UK has slipped below France in total GDP. The explanation in both cases is the exchange rate, when converted into PPP it is not true in both cases [2] [3]

[1] Around the time the euro notes and coins were introduced the pound traded at around 1.62. This also happens to be the number of km in a mile, and thus a few simple remembered conversions - 50 to 80, 66 to 100 - were useful. When a bit later the pound had fallen to 1.4 I remember driving in France and converting km to miles at that rate too, and was surprised to arrive earlier than expected.
[2] There are reasons to believe that Eurozone GDP might be understated. Tim Worstall has shown that there is more unrecorded domestic work in many of those countries than the US, and the UK probably leans to the US model.
[3] When comparing GDP of nations in power terms then market exchange rates are probably better than PPP. However while I think criticism of PPP on the grounds that it is difficult to compare consumption habits across countries is valid, it is also difficult to compare consumption habits across time, and yet there is a reasonable consensus that someone who earned £10,000 in 1970 had a higher income than someone who earns £10,000 today [not totally as some things were clearly worse in 1970].

Labels: currency speculation, economics, pound

posted by Matthew @ 1/12/2008 12:43:00 PM Comments: 0

Currency speculation - end of year roundup

Back on the 25th July I declared that sterling was clearly overvalued against the dollar, and as such I would be buying dollars through Citibank in an attempt to profit from its inevitable rise.

I've periodically updated how its going on this site (usually inaccurately - I declared in November there was $2000, when in fact there was nowhere near that much). Anyway here's the final year tally:

Paid in: £800
Dollars held: $1,631
Average exchange rate realised: 2.038
Current exchange rate: 1.984
Current sterling value: £822

So a gain of about 2.75%, and although the account does pay some interest so it's probably a bit less than that solely due to exchange rate movements, one should also calculate it on the average amount that was in the account, and that would show a higher return.

So it's looking OK.

Labels: currency speculation

posted by Matthew @ 12/22/2007 11:14:00 AM Comments: 2

Yes, I am a genius

My Citibank dollar account statement came through the post this morning, and it tells me that my £100 investment, made on the 25th July, has turned into [drum roll] ...

$205.22

Yes, $2.5022 [whoops - I mean $2.0522, $2.50 really would be a cause for celebration] dollars for each of my pounds. So I am sitting on at least a 2.5% gain, and when the pound collapses to parity as George Osborne takes over I'll have doubled my money!

Labels: currency speculation

posted by Matthew @ 8/24/2007 10:14:00 AM Comments: 3

George Soros, meet Matt T

Can it only be three weeks ago that I announced a foray into the currency markets, betting against the pound at $2.03? Yes, and now I see it's at $1.97, which excluding costs, I make a huge 3% profit! That's, exluding costs, £3!

Labels: currency speculation

posted by Matthew @ 8/16/2007 02:47:00 PM Comments: 1