Punishing the banks

First the regulatory bodies are telling the banks to hold more capital in reserve, to guard against further banking melt downs, but the next minute the ECB inflict a negative interest rate on bank deposits. This effectively charges banks for holding onto capital and encourages them to lend. The ECB also slashed the bench mark […]

Old world v New world v Really Old world

The topic of this week has been government intervention to influence the direction of their economies and has given good examples of the different methods at play. Firstly the Chinese governments attempt to strengthen their own currency by using their huge reserves to buy up the yuan to keep up the price. However the adverse impact […]

It pays to plan ahead

The Post Office have realised a report that shows that Brits waste over £12m a year by waiting until they get to the airport to buy their holiday money. On average they spend an extra 5% on their exchange rate when buying at the airport compared to buying on the high street on ordering online. […]

Currency moves hurt underlying fundementals

Today’s financial news is littered with stories of companies that have been hurt by fluctuations in the world’s currency markets. Firstly the consortium that purchased the Gherkin, the now  famous London landmark, did so using leveraged Swiss Francs. The strengthening of the Swiss Franc meant that their repayments were going up and eventually it became […]

Foward planning not always frugal

The current trend is for central banks giving forward indications on future decisions which is designed to steady the markets and give extra confidence to businesses and individuals. This method was introduced to the UK by the incoming Bank of England Governor Mark Carney and now the incoming Chair of the FED  Janet Yellen has […]

Foreign Exchange movement derails firms profits.

Hornby has announced that it lost a further £200m on a single deal since announcing its results in January, due to adverse exchange rate movements, when the company paid £600m to end its partnership with a Chinese company. This has added further to their forecast loss of £1.2m for the year.

The UK forgot to order its travel money

According the press this week the UK is facing another Black Wednesday over the levels of foreign currency held by the central bank. In 1992 the Tory government tried to prop up Sterling while exiting the exchange rate mechanism by buy its own currency using its foreign exchange reserves, which turned out not to be enough. This […]

It saves to wait, sometimes

Those eager beavers who rushed out to book themselves a place at this years World Cup might have done themselves a favour by securing the best hotels and tickets but those that booked a year ago would have paid 33% more than those booking today due to the huge decline in the Brazilian currency, the […]

Another target tumbles so no lines for new governor.

Another week and an other Bank of England target is reached. Last month UK inflation breached the Bank’s own 2% target with a CPI (consumer price index) of 1.9%. There were worries that high utilities prices would push inflation above the 2% mark and force the new governor to write his first letter to the Chancellor explaining […]

BOE backtracks

Following, what seemed to be a bold move of laying out the conditions that it would look to start raising interest rates, the Bank of England this week was forced to reiterate its position following back to back better than expected data. In his original statement Mark Carney said that the Bank would only start […]