It's like playing the stock market

[Whitephrog]

A few weeks ago, I started to purchase Bugeye seat covers from AH Spares. At the time the $$/GBP exchange rate was about 1.50. The covers were going to cost me $208. Today the rate is 1.38. The covers would be about $16 less today. All the talking heads say the the rate will fall further. I'm going to search for the bottom then make my move!

 

[bill_young]

I found that when we were on vacation overseas that if we used the credit cards for purchases we got a better exchange rate than what was posted for that day when the bill came in. Seems they monitor the exchange rate and run the months transactions through on the best time, saves them and their customers money. That might make your decision easier when you think the time is right.

 

[Hap Waldrop]

I used to import in volume from the UK, the pound gainling strongly on the dollar a few years back slowed me a bit, but UPS changing their shipping rates really slowed me down to screeching. Anyway with the latest conversion rates I'm interested again, talked in detail yesterday with my old buds at Mini Spares, the problem is that they can only offer me UPS expedite, which is now UPS most affordable international rate, called UPS ran a few scenrios, a 1'x1' box with weighting 40lbs would cost $327.00 commercial rate and this is not counting US customs. Not many UK vendors are willing to ship other than UPS to the states, and it is very expensive, I search for a aletnative shipping means to ge back in the import business. Some small vendors will send to you via the postal servce, but weight is more greatly governed by postal service, most big vendors go with UPS or large shipments via boat frieght only, and boat frieght can be a nightmare as well unless you have relationship established with good company. Also keep in mind you don't get the published conversion rate, your bank or CC comapny will charge you a percentage to convert your money, so be ready to add a percentge to that conversion rate, they don't do it for free. Before 9/11 imorting even for the small guy was no big deal, now it is becoming harder and harder.

 

[vagt6]

There's reason to believe the pound will continue to fall against the dollar. Many factors involved, a key one is if the new Obama stimulus package fails. If it does, the dollar will most definitely fall.

If your purchase is a big one, wait until the stimulus packages are all implemented by Congress. Then buy. That's what my crystal ball says, anyway.

That gives us at least another month or more of falling British pounds, and euros for that matter.

Also a good time to book that trip to London, eh?

 

[mxp01]

In times of uncertainty investors seek stability. Since WWII that stability has come in the form of the $USD. World-wide investors still view the $USD as the most stable, convertible currency in the world. In recent months these people have traded out of foreign currencies into the $USD. A relatively constant supply of but increased demand for the $USD has led to it "strengthening" vis-a-vis other currencies.

The Obama stimulus plan will result in deficit spending. The USG will pump more $USDs into the economy, creating an increase in the supply of $USD. This increase in supply (considering steady demand) should have the effect of "weakening" the $USD vis-a-vis other currencies, leading to an altering of exchange rates. Therefore, the pound (and other currencies) should climb relative to the $USD.

The Bush Adminstration took a deliberate course of weakening the $USD upon taking office. This has the general effect of increasing US exports, which is positive for US businesses and econmy. The policy became exacerbated with off-budget spending on the wars in Iraq/Afghanistan and the steady growth of the US current account (mainly federal budget) deficit - all factors in altering the supply/demand relationship of the $USD. We saw the growing effects in the increase in the price of oil (denominated in $USD) while demand grew slightly relative to supply. The fall in gasoline prices (a bi-product of falling oil prices) did not occur due to a sharp decline in demand (US demand for oil fell less than 4% in 2008, so prices should have fallen accordingly. OPEC stated repeatedly that demand for oil was not substantially different in 2008 than in previous years), but to the remarkable strengthening of the $USD in the second half of 2008. (Note: Nothing above is a political judgement, just an explanation of economic factors and cause-and-effect relationships.)

My view is the pound is reaching its bottom. It should begin to level off and strengthen as the USG institutes high levels of deficit spending. In order to do so it will have to entice foreigners to invest is $USD. To do so you have to offer an increasing amount of $USD to an increasingly cautious buyer to entice the exchange. (This is similar to offering more incentives to lure more cautious buyers, as with autos. With autos, incentives are ratcheted up as the month nears its end, trying to bring in shoppers who need more persuasion. The more incentives you offer dilutes the value of the asset you are selling (dollars or cars), allowing the buyer to "get more for his money." That is how the pound (and other currencies) will eventually strengthen.)

I hope that makes sense.

Mike Pennell

 

[walshja]

Mike, that was an awesome explanation !!!