Currency Update April 2011

Published on 04/04/2011 in Your Spanish Home

Euro calculatorThe last couple of weeks have seen horrendous devastation in Japan and with the radiation fallout nobody is really sure what will happen next. What we do know is that Japan’s misfortune will have an impact upon our improving economies. It is suggested that the Japanese economy will shrink this year by 1% as it struggles to overcome the effects of the earthquake and tsunami. When they are able to turn the corner to recovery is still not known, however as reconstruction starts so will their economy grow again.

Link the devastation in Japan to concerns about oil in Libya and it all adds up to a bit of turmoil in the financial markets.

Looking closer to home (Spain) it has been pleasing to see a quiet surge in the property sector with nearly 40000 residential sales registered in January, this is up 17% on the previous January however the surge may be down to the removal of mortgage tax relief so buyers wanted to complete to make sure they managed to obtain the benefit available. The next couple of months will set the stall probably for the remainder of the year.

Within the UK by the time this is in press the Budget will have come and gone and it will no doubt be a defining moment for this government. The probability is that George Osbourne will stick to his plans and not water down tax rises and spending cuts, the need to bite the bullet exists. Good news however is that government borrowing this year is likely to be £8billion less due to a surge in tax receipts. The key thing for the chancellor will be how he can improve jobs and bolster the economy. A difficult task when you consider that during the last 10 years Britain has moved from being one of the best economies to one of the most over indebted.

Sterling has continued to improve against the dollar but against the euro has not been having a good time, great news however if you wish to repatriate funds. Not so good if you are living in Spain and have a pension paid in sterling. We had also been hoping for a “boom” in tourists this year but the current exchange rate will not generate too much wealth into the Spanish economy as families will find it harder to afford the little extras.

Still there is some good news coming from the UK, mortgage approvals in February were up on the January figure and Rightmove reported that the average property in the UK now takes 89 and not 98 days to sell!!

With the UK’s figures for inflation and retail sales figures coming up this week we could see a further slight fall in exchange rates, that is unless the market is really happy with the Budget. Quite which way the market responds is not clear until we hear all the info.

What we do know is that the pound has not had a good time of late and we have seen falls of about 4.5 cents during the last couple of weeks with lows of around 1.14’s.

If you have concerns over where your money is going and you want to make the most of your currency transfers talk to Moneycorp. The local team can provide up to the minute guidance on your personal transfer needs.

They can be contacted on 951319700 and mention you read this on 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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foxbat said:
06 April 2011 @ 20:15

Foxbat agrees! All my pensions are paid in sterling then converted to Euros. So our income is down substantially every time the guy opens his mouth.

More worrying however is what is happening to the US Dollar...we have a small monthly income from the US and over the last three months or so the rate has dropped from $1:0.75€ to $1:0.69€ we are again hit by falling income.

Covlocks said:
05 April 2011 @ 08:39

The reason why the Euro/Sterling remains at this low level is that every time the rate improves, Mervin King ALWAYS comes out with a statement from the Bank of England that reverses the trens and forces it down again.

It happens every time, without fail. That is the UK government manipulating the exchange rate by influencing the market.

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