Whether you are buying a dream holiday home or investing in overseas property, fluctuating exchange rates can make a huge difference to the price you finally pay.

The dollar has been weakening across the board as the global appetite for risk increases. Over the last year and a half, investors have bought dollars because of their risk aversion. The dollar has acted as a world reserve currency. Investors have largely been buying US Treasury bonds which are low yielding. As the global outlook is beginning to improve investors are seeking a higher return and moving out of the dollar. This has significantly accounted for the move from the 1.40’s to 1.60’s.

An undervalued pound is attracting a lot of attention at the moment. There are signs that the UK economy is not worsening, although we are still some way off a definite recovery. The recent IMF report stated that the UK is well positioned for sustained growth. This was a significant reversal from the damning outlook they painted earlier in the year.

The possibility of further ?quantitative easing’ in the states should keep the dollar under pressure and could see it trade up to a technical level of 1.64. Having been heavily sold over the last few weeks there is still a good chance we will see a correction back down below 1.60 in the not too distant future. Longer term the risk remains that it could trade higher.

Since exchange rates are always on the move, foreign exchange specialist Moneycorp, offer the option to ?lock’ into the current rate of exchange for up to 2 years. This is known as forward buying. Should there be a move back to the 1.60 level from current 1.64, forward buying would save you in excess of £4000 on a £100,000 transfer.

Alternatively, you could take advantage of the guidance offered by a Moneycorp dealer and use a stop loss and/or limit orders. This is where you instruct your personal dealer to either automatically buy your required currency, or contact you should the exchange rate reach a certain level. The flexible nature of market orders, coupled with the expertise, market knowledge and dedication of the Moneycorp dealing team, will ensure that your foreign exchange needs are managed proactively, 24 hours a day.

I would recommend that Colordarcy VIP Members seriously look at the option to ‘lock’ into current rate right now, before rates start to fall back.
Please find below the most poignant paragraph that suggests pound’s rally will NOT continue:

Geoff Kendrick, a currency strategist at Swiss bank UBS, says that the big risk is that stock markets will begin to fall, thus removing the main factor behind the pound’s recent rally. “We think the rally is overextended,” he says.

A survey of 60 foreign exchange strategists taken in early May by the Reuters news agency appears to back up this view. The poll expected the pound to trade at $1.48 in six months’ time and $1.53 in a year.

To help make your money go further when buying a property, we are proud to announce a partnership with MoneyCorp to give you access to some of the most competitive exchange rates available in the market.

Colordarcy VIP Members can directly contact Mr Deane Roe, Account Manager at MoneyCorp and he will discuss the options that are available to you. Please email: deane.roe@moneycorp.com and quote reference: Colordarcy10.

Take advantage before the window of opportunity closes.

Kind regards

Loxley McKenzie
Managing Director

This entry was posted on Thursday, June 4th, 2009 at 11:15 pm and is filed under Hot News, News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.