Exchange rate

[Gondrin]

Although i know that this question is impossible to answer I would like other people's opinions if only because my wife and I are not in agreement and it might help to resolve the problem. We have a builders bill to pay ( in euros) and he is happy to wait until July for us to do so. My wife thinks we should pay it now in case the exchanges rates worsen. I wonder if the situation will improve a little if we wait. What do others think?

[Rose (& Greyman)]

I've just flipped a coin and it came up heads. That's as good as it gets I'm afraid ! If anyone knew any better it would already be factored into the rate. Even the biggest banks with all their resources can't second guess it so why should anyone on this forum.

And it's been discussed in endless threads recently.

If I were you I'd just make a joint decision and stop agonising about it. Post your decision on here so you can refer back to it in 3 months when the 'I told you so's' start ! [;-)]

[cooperlola]

Maybe hedge a bit and pay half now, half later (well do the transfer anyway.  If he's prepared to wait until July, stash all the money away - be it in euros or sterling - and earn a little interest on it)?

[Graham & Brenda]

There is no easy answer. However, it is likely that the Bank of England will reduce rates further, so, unless rates for the eurozone are reduced, which isn't looking likely at the moment, this will exert further downward pressure on the £. Wish it were otherwise. It looks like we are going to be stuck with an exchange rate around this level for some time to come.

[malheureusement]

Pay it now.

Gordon Brown seems intent on trying to shore up the inflated house market. This can only be done by applying pressure for the B of E to lower interest rates as he did before the cut this week. The pound could be worth less than the by the end of 2009 as nobody in their right minds will be investing in the UK.

 

[woolybananasbrother]

Those with a bit of guts might be though. Unless Gormless Gordon is trying to force UK into the euro at a cheap price. 80p to the € is my bet.

[AnOther]

I think you're partly right Wooly.

The imbalance has become serious and is also, to some degree at least, artificial and will have to be redressed at some time which may come as a bit of give from both sides, the question is, as always, when, but I personally have no illusions that it will be soon so IMO if you need to buy Euros to pay a bill then waiting until July is more likely see you worse off than better.

As for GG going into the Euro @ 0.80p I don'think even he is that thick.

Fair enough, if there were some parity of trade with Europe then an enfeebled £ could encourage exports which would go some way to partly offset the expense of buying Euro goods but the problem is there is no such parity and outside of tourism and the few remaining companies who actually make something that Europe wants to buy exactly what does the UK have to sell to Europe (or anywhere for that matter!).

Surely the result of such a move would be rampant inflation.

[NormanH]

wb"Those with a bit of guts might be though. Unless Gormless Gordon is

trying to force UK into the euro at a cheap price. 80p to the € is my

bet."

Parity is my guess [6]

[Sprogster]

Britain joining the Euro is not even on the current political agenda, because at the moment anything connected with further European integration is a guaranteed vote loser in the UK. We Francophiles are in a small minority!

Anyway, France would not allow Britain to join at under 1.40 as they would perceive it giving us unfair competitive advantage.

[bigears]

hi

Gordon Brown looks more across the Atlantic rather than towards europe.  I don't think he has ever been keen on joing the euro, even when Blair embraced the idea.  For the near term I would guess the rate will get worse.  The problem I would say is inflation as the cost of transportation is feed into prices on the high street.  How will they tackle inflation?    Looking on the positive side, its a good time for any expats to sell up here and move back to the UK.   Most things have a good and a bad side, winners and loosers.

[AnOther]

[quote user="bigears"]Gordon Brown looks more across the Atlantic rather than towards europe.[/quote]

If he could I thing he would weigh anchor and sail the country West and some in Europe might just clap and wish UK bon voyage !

[quote user="bigears"]Looking on the positive side, its a good time for any expats to sell up here and move back to the UK[/quote]

In pure monetery terms undoubtedly and sadly for some the drop in income due to the exchange rate may be compelling them to seriously consider it, but I think for the majority this is an option of last resort. Certainly I, or rather we, have no desire to live in UK again unless absolutely forced to by unforseen circumstances.

 

[malheureusement]

[quote user="bigears"]

Looking on the positive side, its a good time for any expats to sell up here and move back to the UK.

[/quote]

What is your reasoning behind that?

The pound is falling against the euro.

The UK housing market is in freefall.

Surely in 12 or 18 months time if you were in France with euros you would then get more pounds for your cash and by then UK house prices will be lower so the cash would buy you more.

The only downside is that by then inflation will be higher and if you have savings your interest rate will be much lower.

 

 

 

[cooperlola]

House prices in the UK would have to fall a d*mned long way though - even if I wanted to uproot again.  Our house here was 1/3 of the price we got for the one we sold in England!  And that doesn't account for the cost of actually moving, which could be thousands, when you account for the physical move, re-registering cars etc etc.  I'll just sit here and play the hermit for a while and wait for it all to come out in the wash, I think.

[AnOther]

[quote user="malheureusement"][quote user="bigears"]

Looking on the positive side, its a good time for any expats to sell up here and move back to the UK.

[/quote]

What is your reasoning behind that?

The pound is falling against the euro.

The UK housing market is in freefall.

Surely in 12 or 18 months time if you were in France with euros you would then get more pounds for your cash and by then UK house prices will be lower so the cash would buy you more.

The only downside is that by then inflation will be higher and if you have savings your interest rate will be much lower.[/quote]

But don't forget Bigears that the IMF reckon that French property is also overvalued so if anyone is thinking of returning then best make a move before (if) a slump takes hold here too. Again, timing is everything, and as I'm oft heard to say, there are usually two best times for most things - yesterday and tomorrow [:)]

Coops:

Ignoring all other factors and just in terms of sheer size we got more than twice the property for little more than half the price, and I agree, prices in UK would have to drop 50% before I entertained even a fleeting though of going back.

Incidentally, somebody I know sold his Gite at the back end of last year and for reasons best known to himself decided to send the proceeds back to UK, kicking himself a bit now though [:(]

[bigears]

That  was exactly my point, Malheureusement, after selling here you would be in a strong position to buy in the UK.  Are prices in the UK really in freefall?  Its certainly a buyers market at the moment, our daughter has just arranged to trade upwards.  She found that there just aren't the properties for sale.  I would guess that the uk market will correct to some extent, probably stagnate  for a while with fewer transactions but it won't suffer any freefall in prices.  I am told auction prices are heavily discounted in some areas, these are houses that for one reason or another have to be sold now, I would think the sharks with cash will snap them up.  Who is to know what is really going to happen to the exchange rate and the uk housing market.  Some people put money on their judgement, some get rich some get poorer.  I prefere only to speculate with words.

[Benjamin]

This is an obtuse way of looking at the exchange rate but in the Autumn of 1992 £1 would have got you 7.20 French francs after the pound fell for most of that Summer.

If you then convert this to the current time that would equate to £1 being worth about 1.10 euros, so things have been a lot worse and will no doubt get a lot better.[geek]

[cooperlola]

[quote user="bigears"]

.  I prefere only to speculate with words.

[/quote]Moi aussi![:D]

Although there have been times in my career when I got really caught out by stagnating property prices.  I got a job 100 miles or so from where I lived during the last bad slump in the UK.  As a result, I had to commute for over a year (at the time the Dartford bridge was being built so this took 9 hours in one direction on one occasion when they unearthed a bomb at the works site!) whilst our house just sat on the market and did not budge (two offers got most of the way through then the buyers dropped out.)  In the end the huge mileage I was doing every day just finished me off and I gave up the job.

These days I don't care as I AM NOT GOING ANYWHERE at present.  Thus the value of my home is largely irrelevant. Even though the value of my pension is not...[:'(]

[bigears]

Cooperlola and ErnieY, the equity you have in real estate is part of your overall wealth.  Having the money/means/wealth gives you choices.  It may be that some time in the future, circumstances will arise (as they have for our near neighbours) that make you want to go back to the UK.  If you haven't kept as much equity in your french real estate as you had in the UK (I am discounting the fact that the French housing market and the UK market have increased in value at separate rates), you could be burning your bridges, unless of course you have wisely invested cash elsewhere.  Perhaps for some their is really 'no going back' .  Nothing in our (my wifes and mine) life is as absolute as that, we would always keep a UK property.  I'm not that concerned about short term issues with regard to the value of our UK property (or our french property for that matter), we have no plans to sell in the near future.  My wife tells me she is happy with our current life style but wants to eventually reside in the UK in her declining years, near her grandchildren, no maison de retraite for her.  Options are important to us. 

[cooperlola]

These things are obviously a lot easier if you have no family to worry about.  Both I and the o/h would only be even vaguely likely to go back if we were on our own, and our needs would be much simpler then (a small, easy to maintain flat for one person).  We have nobody we'd wish to move to be closer to, as most of our friends are now here.  The problem with thinking about going back in the long-term future, is that what you may think you are going back for can change radically in the interim.  Thus I prefer to invest in my emotional life here, so that it becomes my home and thus where I want to end my days.  If it's the local maison de retraite then so be it - at least it might have other residents in it whom I have got to know (and somebody can drive me to the circuit in June once a year!)

[mint]

Like you, Coops, we don't have any particular reason to want to move back to the UK.  In many ways, I am glad we can't afford to keep a foot in both camps, as it were.  Makes life simpler not having to worry about the to-let or not-to-let dilemma as some of our friends face.

We feel more committed to making it a pleasure to live here than perhaps we would have otherwise.  We moved at the same time as some people we know and within weeks, they felt they needed to have a bolt-hole back in the UK.  Nice for them they could afford that choice.  But, I for one, do not envy them.  They now spend more time in the UK than in France and have gone back to work to support the 2 houses.  Their knowledge of life in France and the language has consequently taken a huge dip and I don't think that their longed for retirement here in France is going to work out anytime soon.

So, we might not have as much money or own as many properties but, boy, am I thankful that we no longer have a place back in the UK to worry about in terms of whether it's still OK (not broken into, pipes haven't burst, etc) and possibly calculating how much of a diminishing asset it is in these uncertain times.

As they say, behind every cloud........

[lorna]

We are probably going to exchange some pounds to euros tomorrow. This will be largely for house improvements over the coming year. With hindsight we would have done much better to exchange a month ago or even a week ago but in another week's time the situation could be even worse. We fear that the rate may not improve in the near future and have just decided not to put it off any longer. If it turns out that we make this exchange when the pound is at an all time low then all we can say it that we did what we thought was the best at the time. We are just thankful that we exchanged the money for our French house last year before the pound started its freefall.

[bigears]

hi

Sweet17, do you think that the french property market is immune to stagnation and price falls?  If your house primarily appeals to the overseas buyer then it can be at risk.  They are very few overseas buyers where we are and properties are sticking and prices are being reduced.  Many brits have bought cheap properties here in France and overspent on the development, what I mean is overdeveloped the site.  If owners of such properties want/need to return to the UK, they naturally want at least their money back and are disappointed if its unacheivable.  It just makes it more difficult to return if you have to.

We don't worry about either of our properties, our UK house is also occupied by one of our offspring and his family, I wouldn't say its looked after but at least its occupied. 

[mint]

You are so right, bigears.  Nothing is certain in this life and I am not sure there is a next!

So, my house falls in value, if it does, it does.  It's still a roof over my head and I am not keen on the complications of having too many possessions.  Call me simple, but I'd rather spend my time doing the things I enjoy rather than guarding my possessions.  Just hoping that the pensions, etc will support me until such time as I pop my clogs.  I'm not going to worry too unduly about the value of my house as long as I am living in it.

[AnOther]

I'm lurking here but can't find much to say because Coops and Sweet 17 are saying it all for me [kiss][kiss]

As the Monty Python crew sang:

"Always look on the bright side of life dada, dada, dada dada dada dada" [:D]

 

[BobDee]

Hi Guys, Its not all doom and gloom. As of this morning Stirling seems to be clawing its way back a tad (.7965 as I type),. The strong euro is only based on 2 countries within Euro land that have positive balance of payments, Germany and The Netherlands, the rest  aren't a lot healthier than the UK and some far worse, though the UK has the problem of massive home ownership as the norm and therefore has more subprime possibilities. Berlosconi wants a reduction in the value of the Euro and its only the fear of inflation increases that keeps the ECB holding the Euro rate stable. There has to be traders looking for possible future Euro weakness and buying Stirling. I would bet on a decent improvemnt in Stirling in a few months time.

I need to move money to France but am personally holding off for a bit. As someone said, the only real test is to look at this forum in 6 months time,

Regs BobD