Doom and Gloom seems to have been the order for 2010 particularly when looking at the current economic situation. How many times have we read terms “Financial Crisis, Economic Downturn and Credit Crunch, Quantative Easing” Then of course the most recent terminology “Stress testing”, phrases we are all now familiar with.
Yes 2010 has been an interesting year particularly for the pound against the euro, sentiment rather than economic factors seemed to have influenced exchange rates. The exception being the time following the election in the UK.
We have seen a considerable swing in the value of our pound from a 12 month interbank low of 1.095 to a high of 1.235. This in turn has had a dramatic impact upon budgets. For example if you were transferring £1000 at the peak it would be worth 1235 euros compared to the low of 1095 euros, that’s a massive 140 euro difference during the 12 month period. It has certainly been a stormy ride, some good news however that during the last 5 weeks we are better off with exchange rates by some 6 cents compared to the low in October this year.
Back at the time when the election was taking place in the UK, the big fears in the market was the Greek debt situation which seemed to run for sometime without anybody really knowing what the true level of the debt was. Strange how the tale also rings true today but with a different country. Of late we know it has been Irelands turn, whose next, Portugal, Spain? Spain in particular is saying it will not need a bailout, I think it’s a question of lets wait and see.
With all the woes in the eurozone our pound should have seen some strong movements valuing our pound higher and getting us more euros, strangely however it has not had the impact we all hoped for. The concern is the level of Britain's banks' exposure to the Irish debt and the need for taxpayers to once again contibute.
Even though Spain is being optimistic, one of the problems lurking around the corner is the fact that recent changes introduced by the Spanish Central Bank in September threatens to reverse the recent trend of slowing property prices. It may very well be that come the New Year we will see the banks flooding the market with properties they hold on their books. Why?
Under the changes, banks must now make provisions for bad loans after just 12 months rather the current 72 months, which will provide a strong incentive for lenders to dump properties more quickly. The new rules also force banks to value properties more realistically which gives them further incentive to sell.
So will this mean the euro will weaken? Unfortunately the answer is not that simple and we will have to wait and see.
For the expat transferring funds there is some way of protecting your money and that is to talk to our preferred currency partner Moneycorp. They can advise you when to transfer and also offer a range of options that will enable you to fix a rate so you know what your budget is for the coming 12 months.
Give Moneycorp a ring on 951 319 700 or email firstname.lastname@example.org When contacting Moneycorp please quote Eye On Spain.
Written by: Moneycorp
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For more information about how Moneycorp can save you money when sending money abroad, please visit the dedicated Eye on Spain/ Moneycorp website.
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