Exchange rate causes hardship for expats

By admin • Jan 6th, 2009 • Category: Personal Finance

Exchange Rate

Exchange rates display, seen at Suvarnabhumi I...
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For British expats, the rapid “devaluation” of pound sterling over the past year to 18 months has caused hardship. At one stage, the euro : pound exchange rate was 1:70 to 1. Today, the exchange is moving towards parity (1:1). Many expats who are deriving income (or bank interest)/pensions in the UK have seen “income” fall by 40%.

Many expats have retired to Spain or France thinking their standard of living would be higher. Many are having to consider returning to the UK as they cannot afford to stay abroad. The UK government appears to be taking no steps to halt the decline in sterling - quoting it is good news for “exporters”. This is the same government that has overseen the rapid decline in the UK manufacturing industry.  Bad news for expats! The forecast suggest that the pound sterling may decline further as the UK is forced to cut interest rates further!

The one good piece of good news is that IF they can sell their property in euro-land, then the currency exchange is working in their favour, and they will get more pounds! Spain, in particular, has a very weak property market and selling a property may mean selling at a substantial discount. France’s property market seems to be more healthy - the government seems to be actively taking steps to keep the market from declining. However, there are still good price reductions on property in France.

What are the long term prospects?
Most analysts seem to be gloomy about sterling. However, there is an opinion that Spain, Italy, Portugal and Greece are finding it extremely difficult to survive within the confines of a strong and stable euro. Talk of leaving the ERM or devaluing the euro may seem far-fetched but perhaps indicates that all is not well in euro-land. Maybe a weaker euro is in the pipeline?

Preserving (and maximising) the sterling / euro exchange is the domain of the currency exchange companies. They will save you lots of money if you are moving funds from the UK to “expat” land.  So looking at their services may help you retain more of your money!

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