bobby12 0 Posted February 21, 2004 Share Posted February 21, 2004 The exchange rate today is 205 yen to the pound. Thats a jump of 10 this week. I`ve had dosh I want to send home for months, but I wouldn`t send it when the rate was steady at 195 cos i thought it was too high. Is it ever gonna stop spiralling up? The rate was 170 when I came to Japan 2.5 years ago. I might as well booze it all away. Link to post Share on other sites
enderzero 0 Posted February 21, 2004 Share Posted February 21, 2004 Someone forgot to tell the USD. Official exchange rate: 1 USD = 107.5 JPY Travelex's exchange rate: 1 USD = 97.6 JPY (My money is in USD) Link to post Share on other sites
damian 0 Posted February 21, 2004 Share Posted February 21, 2004 1. After a quick appreciation in Q4 last year, the yen has been steady against the USD. 2. The USD is depreciating against most ccy's. 3. Therefore the yen is depreciating against most ccy's (eg GBP, AUD, CAD). The USD is shot, said it before, say it again. It is not even able to appreciate against the JPY even though the MoF has spent cronic amounts trying to force the JPY to depreciate against the USD. Bobby12 that 170 to 205 move is nothing: 20% in 2.5yrs. Look at the AUDUSD: 63% appreciation over the same time. Link to post Share on other sites
enderzero 0 Posted February 21, 2004 Share Posted February 21, 2004 Well a chocolate bar still costs the same in USD. ...maybe. barok? Link to post Share on other sites
indosnm 0 Posted February 21, 2004 Share Posted February 21, 2004 Yeah the AUD is a killer! Can't wait till the next recession! Link to post Share on other sites
MistaSparkle 0 Posted February 21, 2004 Share Posted February 21, 2004 I've read that the depreciation of the dollar is a symptom of mounting US debt, which dick cheney was quoted as saying "...is a good thing." db: Is there any truth to that? Link to post Share on other sites
damian 0 Posted February 21, 2004 Share Posted February 21, 2004 Quote: Originally posted by MistaSparkle*: I've read that the depreciation of the dollar is a symptom of mounting US debt, which dick cheney was quoted as saying "...is a good thing." db: Is there any truth to that? YES!! It is 100% true that you have read this. Link to post Share on other sites
miteyak 0 Posted February 21, 2004 Share Posted February 21, 2004 Sorry British compatriots... but my sisters getting married may 1st, so I have to return to the motherland. This invariably leads to an abysmal exchange rate. )seriously, I:ve known rates of 169 while living here, but never has it been below 210 on a blightey return!) If you can hold changing money off til after may 5th, things should improve noticably Link to post Share on other sites
nzlegend 1 Posted February 21, 2004 Share Posted February 21, 2004 Nz dollar is also horrendous 76.73! I remember the days when it was 45! oh the pain the pain..... Link to post Share on other sites
nzlegend 1 Posted February 21, 2004 Share Posted February 21, 2004 wow that is poor form isnt Bobby12? I am feeling your pain buddy, hang in there Link to post Share on other sites
bobby12 0 Posted February 21, 2004 Author Share Posted February 21, 2004 so basically everyone is a loser apart from the japanese working overseas, who none of us are. Link to post Share on other sites
Plucky 0 Posted February 21, 2004 Share Posted February 21, 2004 So, am I right to assume that most people here want the Yen as strong as possible? Would this be because you get paid in Yen and then can exchange it for more of your country's currency? For me, it's the opposite. I get paid strictly in USD and have to live on the Japanese economy (for the most part). I've watched it go from around 143 yen to the dollar down to our base exchange rate of 103. It's a killer on bills and rent for me! The Bush admin has really put the US economy down in the crapper over the last 4 years. Link to post Share on other sites
nzlegend 1 Posted February 22, 2004 Share Posted February 22, 2004 Quote: Originally posted by Plucky: So, am I right to assume that most people here want the Yen as strong as possible? Would this be because you get paid in Yen and then can exchange it for more of your country's currency? ping pong! I used to get $220 for an ichiman now I get only $130! makes it harder to save up fora house back home, but I can see your point Plucky, what is seen as beneficial to some will always be detrimental to others, winners and losers, there always has to be one of each. I just wish I was on the winning team a little bit longer. also all the stunt guys (Americans and Australians) at Universal Studios get paid in US currency, they must be feeling the pinch too, maybe becoming more reluctant to come over and do a stint. Link to post Share on other sites
indosnm 0 Posted February 22, 2004 Share Posted February 22, 2004 The thing with that kamo is just keep ya cash here while i's high ( if ya can) and send it back when it low again (WHEN??). Not always possible to do this especially if you have a loan back home (like me ) When I came here the rate was around 92-95 to the Aussie $. Now that I think back, without the rate being so high then I would not be here now as my money wouldn't have gone as far as it did. Link to post Share on other sites
Ocean11 0 Posted February 22, 2004 Share Posted February 22, 2004 In general, do the higher rates of interest in the real world (ie, not Japan) still work out a better deal even if you do lose on the exchange rate? I'm thinking about getting bonds that pay 4-5% and I'm wondering if its worth it... Link to post Share on other sites
damian 0 Posted February 22, 2004 Share Posted February 22, 2004 I wont go into it now as it would take to long and it is the weekend et etc. But in short here are two takes on the topic you raised: 1. there is a financial market product called FX Forwards, or FX Swaps, or just Forwards. VERY simply, they are priced such that the interest rate differential between country A and country B is 100% taken into account in the value of two currencies in the future. So today you are earning a higher % in the UK.... buuuuut..... you have FX risk (if you want to brink the cash back to Japan). This risk can be hedged out with a forward transaction in the FX swap market, however the price that you would execute that fwd swap at would take into account and negate the interest rate advantage you have today. You cant have an interest rate advantage and no FX risk at the same time. There is heaps more theory behind this and I have rather loosely (at best) applied a light brush of the theory to your question. 2. Some people like to invest by always buying a high yielding currency against a low yielding currency. In this way you borrow yen and buy GBP or AUD and invest there (indosnm is on the other side of this trade and it is hurting him.... no fault of his). You get to pick up the interest rate spread whilst in theory, more often than not, enjoying an appreciation in the long currency (eg AUD, GBP) V'S the short currency. THIS APPRECIATION DOES NOT ALWAYS HAPPEN and you can get really burnt. Many people refuse to recognise the capital value risk until it kills their financial security. at that stage they decide that next time they should hedge out the FX risk, yes, you guessed it....... see bullet point 1..... no FX risk = no interest rate differential pickup. Not to sound patronising at all, but for most people there is no free lunch on the average and in the long run. Link to post Share on other sites
Ocean11 0 Posted February 22, 2004 Share Posted February 22, 2004 Doesn't sound patronising at all. Thanks. Can you recommend any methods for calculating out the different scenarios? I'm sure it can be done with a nice spreadsheet, if only one were familiar with that kind of black magic. Would the best thing to do be to buy Australian dollars, and invest in the required amount in Australian government bonds to be able to emigrate there on retirement? I mean, Japan is pretty much screwed for the future, and it looks like the US is too... Link to post Share on other sites
brit-gob 9 Posted February 23, 2004 Share Posted February 23, 2004 miteyak I think you should compensate me - I have to change money this week for the UK. And its all YOUR FAULT. Link to post Share on other sites
damian 0 Posted February 25, 2004 Share Posted February 25, 2004 Quote: Originally posted by Ocean11: Can you recommend any methods for calculating out the different scenarios? .... Would the best thing to do be to buy Australian dollars, .... Depends on what the scenarios are. There is certainly a very specific spreadsheet that is used in calculations of required to appraise teh transactions taht I eluded to, however thse spreadsheets are only useful in a banking environment and not in the retail realm. However if you are really interested I can perhaps guide you in the educational experience of learning how to determine the value of a currency pair in X days in the future given the differential in interest rates between those two currencies over the same X day period. Essentially, you need to express this differential in spot FX points and add/subtract to the spot rate. There is more you can do with this, but to have any need for it you would need to have access to a forward FX hedge, which like me in the retail market, you do not have. The idea is that you are also borrowing JPY top buy the GBP. Eg: a) you borrow JPY at J% for 6 months you buy GBP/sell JPY at X spot c) you invest (lend) GBP at G% for 6 months d) you hedge your FX risk with a 6 month FX forward at price F Now, the difference between F and X will be the difference between J and G, expressed in FX points. If it is less then you can become an arbitrage guru and pump the price until you close the gap, all the time collecting a risk free profit. Sounds great, which is why the opportunity does not exist for longer than a few minutes and you need 100's of millions of $ to make any real income from the very small arbitrage. Sorry, a little off track. Interestingly, the online banking facility at Citibank Japan has a calculator that will tell you what FX ratye you will need to buy back your JPY at in 6 months time if you buy GBP today at X and earn G% on the GBP. This is in fact a small element of the overall equation that is used in the forwards market spreadsheets. Now, at the end of this post is a para regarding futures. By using them, you will know in advance what price you can buy back your JPY, you will know G% and you know price X. This alone will demonstrate that it is almost impossible to make money by investing in GBP and at the same time having no FX price risk. Without the ability to effectively hedge you FX risk and assuming that you are not interested in speculating with this money then your best option is to invest in a currency that you intend to keep your money forever. That way you do not have to face the potential pain of losing so much when you bring your cash back to Japan, even though you made so much more in terms of interest income in the UK. By the way, you CAN hedge FX risk very easily if you wish to move around multiples of GBP125,000 This is done by transacting in the futures market for FX rates (http://www.cme.com/prd/overview_BY678.html). These futures contracts have underlying values of GBP125,000 so if you cant delta hedge fractions of that amount. Quite seriously, using these products is not as daunting as it sounds, however the idea is that your FX risk is negated, so if you make money on the actual cash FX transaction (eg when you buy GBP125k), you will lose approx the same amount on the futures hedge. This is the whole idea however it will let you live in peace as you enjoy the higher UK interest rates. Before you take this option then PLEASE ensure that you educate yourself first as to the basics of the product. Link to post Share on other sites
Ocean11 0 Posted February 26, 2004 Share Posted February 26, 2004 Thanks for taking the time to write that. The advice is much appreciated. These are issues that I can't afford to be ignorant of any longer... Link to post Share on other sites
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