Author Topic: A quick question re pounds or euros  (Read 8952 times)

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Re: A quick question re pounds or euros
« Reply #15 on: June 10, 2008, 04:33:24 PM »
Colin, think of it this way, currently the pound and euro are appreciating and the USD is depreciating, if a money exchanger takes in pounds or euro today and cashes them in tomorrow he may get a better return than say today, however if he takes in Dollars the way the dollar is deprciating, it may be worth less tomorrow, is that right ben?

The GBP was at over 2 to the USD a few months back. It is now around 1.97. I believe that is depreciating. The Euro has been fairing much better going from 1.30 to 1.55ish lately. The USD is currently over 44 to the Piso. The highest it has been for some time

I am still confused, that\'s why I would like to find some simple reading matter on the subject.

Colin

Offline coutts00

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Re: A quick question re pounds or euros
« Reply #16 on: June 10, 2008, 05:15:06 PM »
I think my wife has a 6000 page book \"Understanding International Currency Fluctuations and the Free Market Economy, a Simple Step by Step Guide\".... I\'ll see if I can find it.
Wayne  ;D ;D

Offline BenK

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Re: A quick question re pounds or euros
« Reply #17 on: June 10, 2008, 09:19:34 PM »
Colin, think of it this way, currently the pound and euro are appreciating and the USD is depreciating, if a money exchanger takes in pounds or euro today and cashes them in tomorrow he may get a better return than say today, however if he takes in Dollars the way the dollar is deprciating, it may be worth less tomorrow, is that right ben?

That\'s basically true, and the reason why the exchange rate for other currencies such as the pound or euro doesn\'t usually reflect a straight proportion to the dollar. Money is, after all, traded as a commodity, so there is a fair bit of forecasting that goes into determining a rate on a given day. And it also depends on what resources the moneychanger has to work with cross-exchange -- in other words, trading pesos for dollars and then trading the dollars for yen or pounds or euros to work back around to whatever ratio will eventually give him a profit in pesos.

Sorry to say, Colin, about the simplest reading material you\'re ever going to see on this topic is the sign behind the counter at the forex kiosk. The pound and the euro don\'t necessarily always match up against the dollar, so it can happen that one goes up while the other goes down, as you noted. The pound value floats against both the other currencies, and one of MANY factors that determines its rate is the relative supply of the two foreign currencies in the UK system.

Remember, the guys who do this for a living (I\'m glad I\'m too poor to worry about it), only live about five minutes into the future. Make your move when you can make a profit; ten minutes from now may be a different story.
That\'s not chicken.

Offline Manila Cockney

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Re: A quick question re pounds or euros
« Reply #18 on: June 11, 2008, 12:13:00 AM »
The pound is not moving in the same direction as the Euro. Since Jan 1, the pound has depreciated significantly from the Euro falling from 1.36 to 1.26.
The Euro has appreciated against the dollar going from 1.46 to 1.55. The pound has depreciated slightly against the dollar moving from 1.985 to 1.95

Offline BenK

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Re: A quick question re pounds or euros
« Reply #19 on: June 11, 2008, 01:21:43 AM »
The pound is not moving in the same direction as the Euro. Since Jan 1, the pound has depreciated significantly from the Euro falling from 1.36 to 1.26.
The Euro has appreciated against the dollar going from 1.46 to 1.55. The pound has depreciated slightly against the dollar moving from 1.985 to 1.95

See, someone actually pays attention, which I don\'t outside of dollars. Illustrates the point, each country\'s currency can move to a noticeable degree independently of other currencies. If you really want to get whacky, we can start discussing yen.
That\'s not chicken.

  • Guest
Re: A quick question re pounds or euros
« Reply #20 on: June 11, 2008, 06:45:47 AM »
Colin, think of it this way, currently the pound and euro are appreciating and the USD is depreciating, if a money exchanger takes in pounds or euro today and cashes them in tomorrow he may get a better return than say today, however if he takes in Dollars the way the dollar is deprciating, it may be worth less tomorrow, is that right ben?

The GBP was at over 2 to the USD a few months back. It is now around 1.97. I believe that is depreciating. The Euro has been fairing much better going from 1.30 to 1.55ish lately. The USD is currently over 44 to the Piso. The highest it has been for some time

I am still confused, that\'s why I would like to find some simple reading matter on the subject.

Colin

Colin,

This subject gives me a headache too but I want (need) to see what is happening daily with USD, GBP, Euro, Piso even Ringgit. All I do is check my currency converter chart in \'My Yahoo\'. Very simple to set up & pretty accurate. It is set as a grid, 5 down & 5 across so this way I can see how each is performing against the others.

  • Guest
Re: A quick question re pounds or euros
« Reply #21 on: June 11, 2008, 08:39:47 AM »
Colin, think of it this way, currently the pound and euro are appreciating and the USD is depreciating, if a money exchanger takes in pounds or euro today and cashes them in tomorrow he may get a better return than say today, however if he takes in Dollars the way the dollar is deprciating, it may be worth less tomorrow, is that right ben?

The GBP was at over 2 to the USD a few months back. It is now around 1.97. I believe that is depreciating. The Euro has been fairing much better going from 1.30 to 1.55ish lately. The USD is currently over 44 to the Piso. The highest it has been for some time

I am still confused, that\'s why I would like to find some simple reading matter on the subject.

Colin

Colin,

This subject gives me a headache too but I want (need) to see what is happening daily with USD, GBP, Euro, Piso even Ringgit. All I do is check my currency converter chart in \'My Yahoo\'. Very simple to set up & pretty accurate. It is set as a grid, 5 down & 5 across so this way I can see how each is performing against the others.


Keith, while it is important to know what is happening, I would like to know why it is happening. When I first visited the Philippines 20 years ago I was getting P37=£1 it recently went to nearly 3 times that amount. What happened to in that period to reduce the Philippine economy to 1/3 of its value? In the last few months it increased by around 20% and has now dropped back about 10% (very approximately). I don\'t expect to be able to understand the world economy, but as similar changes are occuring with the $, I assume the main problem is within the Philippines. It would be nice to have even a vague understanding as to what the Philippines is doing wrong.

Colin

  • Guest
Re: A quick question re pounds or euros
« Reply #22 on: June 11, 2008, 09:22:07 AM »
What is presently \"wrong\" is, the RP Government is borrowing from abroad to pay for the Government freebies for the poor that makes up the majority of the population of the Country. A short term fix that will lead to a long term major problem as the world is turning these days. 

Apparently, at present, a guide line is a guess-by-golly thingie when it comes to the exchange of currencies, at lease for us novices? History is just that and may not provide a todays trend?

A situation I find myself in! Do I reinvest interest earned or what and where  ??? ??? As always, to put money underground in the Northern 40 is a looser for sure!
B-Ray

Offline Manila Cockney

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Re: A quick question re pounds or euros
« Reply #23 on: June 12, 2008, 11:10:11 AM »


I am still confused, that\'s why I would like to find some simple reading matter on the subject.

Colin


Colin,

Its all about supply and demand caused by various factors such as imports, exports, investments, overseas remittances, speculation etc. Interest rates has a direct effect on the currency. The FX dealers have a significant effect on the markets as they spend their day speculating by small percentage points going long and short on the currencies. There is also Central Bank interference. The Philippine Central Bank tries to keep the currency stable so recently has been selling some of its dollar reserve.  In 1997 when the peso was pegged to a basket of currencies, its spent most of its reserves but lost to the speculators.  Other countries have managed to keep their currency pegged such s Hong Kong. Maggie Thatcher use to say eventually pegs will not work and currencies will go to its true value. A point taken when the pound took a significant crash against the dollar back in the early nineties. However, the creation of the Euro is effectively a peg of currencies between DM, FF, Lire etc. and has been working with success. It does though restrict the individual countries economic policies.

 

I search for something for you to read, this was about the best I could find.

http://economics.about.com/cs/money/l/aa022703a.htm

A Beginner\'s Guide to Exchange Rates and the Foreign Exchange Market
 

  • Guest
Re: A quick question re pounds or euros
« Reply #24 on: June 12, 2008, 11:18:24 AM »


I am still confused, that\'s why I would like to find some simple reading matter on the subject.

Colin


Colin,

Its all about supply and demand caused by various factors such as imports, exports, investments, overseas remittances, speculation etc. Interest rates has a direct effect on the currency. The FX dealers have a significant effect on the markets as they spend their day speculating by small percentage points going long and short on the currencies. There is also Central Bank interference. The Philippine Central Bank tries to keep the currency stable so recently has been selling some of its dollar reserve.  In 1997 when the peso was pegged to a basket of currencies, its spent most of its reserves but lost to the speculators.  Other countries have managed to keep their currency pegged such s Hong Kong. Maggie Thatcher use to say eventually pegs will not work and currencies will go to its true value. A point taken when the pound took a significant crash against the dollar back in the early nineties. However, the creation of the Euro is effectively a peg of currencies between DM, FF, Lire etc. and has been working with success. It does though restrict the individual countries economic policies.

 

I search for something for you to read, this was about the best I could find.

http://economics.about.com/cs/money/l/aa022703a.htm

A Beginner\'s Guide to Exchange Rates and the Foreign Exchange Market
 


Thanks for the reference MC, I will now take a look.

Colin

  • Guest
Re: A quick question re pounds or euros
« Reply #25 on: June 14, 2008, 01:27:08 AM »
That beginners guide was helpful but when they start talking about arbitrage and transivity, etc. I\'m lost. Of course I once had a math teacher who said he would pass me as long as I promised never to take another math course. :)

  • Guest
Re: A quick question re pounds or euros
« Reply #26 on: June 14, 2008, 06:37:59 AM »
That beginners guide was helpful but when they start talking about arbitrage and transivity, etc. I\'m lost. Of course I once had a math teacher who said he would pass me as long as I promised never to take another math course. :)

I read the first part and also found it helpful, it gave me a vague understanding of the system. I did not get to the arbitrage and transivity, but not too sure that I want to now  ;D ;D ;D

Colin

Offline Manila Cockney

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Re: A quick question re pounds or euros
« Reply #27 on: June 14, 2008, 09:59:22 AM »
That beginners guide was helpful but when they start talking about arbitrage and transivity, etc. I\'m lost. Of course I once had a math teacher who said he would pass me as long as I promised never to take another math course. :)

I read the first part and found it and also found it helpful, it gave me a vague understanding of the system. I did not get to the arbitrage and transivity, but not too sure that I want to now  ;D ;D ;D

Colin

Arbitrage is really quite simple. Suppose you go to the money changer and GBP/USD = 2, USD/PHP =45. You would expect GBP/PHP to be 90. If for instance though it was 95, for GBP100 you could buy PHP9500. With the PHP9500 you buy dollars which gives you  USD211. From the dollars you will buy back the pounds giving you GBP105.5. making a profit of GBP5.50. In practice this will not happen as GBP/USD changes the GBP/PHP will change with it so the GBP/PHP will be 90. The peso in the financial markets, like most currencies  only trades against one currency the dollar. The GBP/PHP is a considered a cross currency meaning to get the rate the bank does the following calculation GBP/USD (2) x USD/PHP(45) =90.  This is simplified as for each currency the bank has two rates the buy rate and sell rate.

The FX traders trade to the 4th decimal point of a currency called pips. Sometimes for a very quick moment in the trading there may be an arbitrage situation say between, Dollar, Euro and Pound. It does not last long, given the sophisticated computers,  before the arbitrageur will come in and synchronise it all.

What is the relevance to us in Philippines, not a lot except the fact that it would not make any difference if the peso traded against the dollar only or against many currencies as arbitrage will always keep them in synch. The one thing to keep in mind that even though the peso has been quite volatile against the dollar in the last few years, it is generally less volatile against the dollar as other currencies. This because of the volatility between the major currencies and is why in the last few years you have seen the pound vary so much against the peso.

 


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