So... a flutter on the Euro ?

stickyfiddle

Evilmags said:

Risk free option is to buy Swiss Francs ahead of the Referendum. If Brexit happens then you sit until the pound falls (forced political selling) then buy back pounds.

How is that risk-free? If remain wins and the pound rallies to $1.50 and stays there you still lose 7%!

Sporky

stickyfiddle said:

Evilmags said:

Risk free option is to buy Swiss Francs ahead of the Referendum. If Brexit happens then you sit until the pound falls (forced political selling) then buy back pounds.

How is that risk-free? If remain wins and the pound rallies to $1.50 and stays there you still lose 7%!

"Risk-free" is an economist term that means "I have no idea".

stickyfiddle

I'd also argue that buying any currency for a country you have no intention of visiting is also far from risk free. At least if you buy Euros are they drop in value you still have money you can spend in a country you want to go!

Flanging_Fred

stickyfiddle;1120543" said:

I'd also argue that buying any currency for a country you have no intention of visiting is also far from risk free. At least if you buy Euros are they drop in value you still have money you can spend in a country you want to go!

Damn, that's my plan to invest heavily in the Afghan Groat up the swannee.

Emp_Fab

Well, I've just gambled £800.  I read in Martin Lewis's MoneySavingExpert email about a system for buying Euros now.  Basically, you buy a load of Euros from an agency/bank that allows you to cancel your purchase.  That's the Post Office, Travelex and Sainsbury's.  Buy them for collection after the Euro vote and if the exchange rate slumps, just cancel your order and you get your full sterling-paid price back (minus a tenner in the case of Sainsbury's).  If the exchange rate soars, then you're quids-in.

http://www.moneysavingexpert.com/team-blog/2016/06/21/how-to-buy-eurosdollars-now-to-beat-any-eu-vote-shock/

Sporky

So you're speculating against your own country's currency?

Does that feel morally right?

WezV

I have this conundrum with my a small amount of shares  - its in USD and slowly rising, and the weakening pound is making it even better at the moment

There is a merger that could positively affect my share value  in the next few months leading to more USD from the investment, but if things go well tomorrow I may end up with less GBP from that.

Emp_Fab

Sporky;1120753" said:

So you're speculating against your own country's currency?

Does that feel morally right?

Yes, you're right. I should be ashamed of myself because my moral values don't match those of the currency traders in the city who are all willing to forgo profit in the name of loyalty to Queen and Country. Yes, I shall cancel my purchase immediately and thrash myself soundly with a bag of commemorative fifty pence pieces whilst singing the national anthem.

Sporky

Hmm. Touched a nerve there! Sorry Emp. Just struck me as a dubious way to make a quick profit.

Drew_TNBD

Emp_Fab == Kevin Tremp

chillidoggy

I've a bad feeling that this could go wrong.

Emp_Fab

Sporky said:

Hmm. Touched a nerve there! Sorry Emp. Just struck me as a dubious way to make a quick profit.

Dubious ?  How ?  Genuinely puzzled !  @Sporky

Sporky

Firstly you're speculating against your own currency. I would hope it's obvious why that's both morally and economically questionable. At £800 it's not going to make a significant difference but the principle is the same, and you've previously been a stickler for principles (the Kineckt thing springs to mind).

Secondly, you're trying to exploit the currency exchange agent's processes.

Thirdly, where do you think your potential profit comes from?

The other thing that strikes me is how unlikely it is you'll actually make a profit - even assuming the pound does tank, the exchange agent will have different buying and selling rates so the fall will have to be significant before you actually see their buying rate get below what you'd be paying. I would not be surprised if you have to use a different agent to sell through.

I don't dispute for a moment that some of the activity in the city is much more questionable.

Evilmags

Just a bet on Brexit. Seems fair to me. Unlikely to be 70 quid either way.

Emp_Fab

Sporky said:

Firstly you're speculating against your own currency. I would hope it's obvious why that's both morally and economically questionable. At £800 it's not going to make a significant difference but the principle is the same, and you've previously been a stickler for principles (the Kineckt thing springs to mind).

Secondly, you're trying to exploit the currency exchange agent's processes.

Thirdly, where do you think your potential profit comes from?

The other thing that strikes me is how unlikely it is you'll actually make a profit - even assuming the pound does tank, the exchange agent will have different buying and selling rates so the fall will have to be significant before you actually see their buying rate get below what you'd be paying. I would not be surprised if you have to use a different agent to sell through.

I don't dispute for a moment that some of the activity in the city is much more questionable.

OK, Firstly, I genuinely don't have any concept of why speculating against Sterling has anything to do with morals or it being questionable economically.  This intrigues me.  How is it morally wrong ?

Secondly, Yes.  I'm exploiting a loophole.  I'm absolutely fine with that.  The banks can close the loophole if they choose, but all three have stated that they have no intention of doing so.  Where's the problem ?

Thirdly, Sainsbury's bank probably.  Unless it's the destitute or a charity I really don't give a shit to be honest.  It's part and parcel of what the banks are offering.  They are offering the option to cancel as a selling point.  They don't have to do that, it's part of their package to attract your custom.  The rates they are offering are also slightly below what you can get elsewhere, so I'm quite sure they know exactly what they are doing.  They are speculating that they will gain more on the extra business at a more beneficial rate to them than they might lose in the event of a slump of Sterling.  These are major players in international finance - I'm not trying to con a pensioner out of her savings !

Fourthly, if the pound slumps, I have no intention of trying to sell the Euros back.  I'm planning on keeping them to go on holiday with later in the year.  If the pound rallies then I cancel my order and buy another lot closer to the date at the more favourable exchange rate.

prh777

ICBM said:

Soros is now saying the pound will fall heavily in the event of a Leave, so it will. If the speculators think so it becomes a self-fulfilling prophesy since they will sell pounds - this is a fundamental problem with our financial system, but it's a fact.

Look at what happened in 1992 for evidence.

It is not a problem with the financial system it is a consequence of uncertainty and downside risk.  Rational investors (speculators, pensions, individuals, investment in businesses) do not like the likely negative economic outcome of brexit.  therefore they will sell GBP assets and sell the GBP this generates for another currency thus driving its value down against other currencies.  The UK is a large recipient of so called Foreign Direct Investment (investors whose base currency is not GBP thus must buy GBP to invest in UK assets) negative outlook for the UK will make them reconsider their investments.  Speculators will position themselves to generate positive returns from what they forecast to be the outcomes.  Forecasting foreign exchange movements is notoriously difficult fwiw.

Speculators in the currency market are wrong a great deal and do not drive the exchange rate in the medium term as they are a very small part of overall exchange activity.  Even with the Soros fund at 20 odd billion, any position he took in sterling would be steamrollered if trade activity shifted meaningfully and gloabal demand for GBP were to be the opposite of his/their view.

Sporky said:

So you're speculating against your own country's currency?

Does that feel morally right?

Why is this a moral issue.  Why is it 'his' currency.  Do you want the GBP to be very strong?  Do you know if a strong currency is a good or bad thing?

You will find most industry would prefer it to be weaker as this in theory should help UK goods and services be more competitive in a global market and be generally positive for UK wealth and employment (unless you are a foreign asset holder and haven't hedged).  Interestingly during sterling's last slide there was no noticeable uptick in exports.

prh777

Emp_Fab said:

Sporky said:

Firstly you're speculating against your own currency. I would hope it's obvious why that's both morally and economically questionable. At £800 it's not going to make a significant difference but the principle is the same, and you've previously been a stickler for principles (the Kineckt thing springs to mind).

Secondly, you're trying to exploit the currency exchange agent's processes.

Thirdly, where do you think your potential profit comes from?

The other thing that strikes me is how unlikely it is you'll actually make a profit - even assuming the pound does tank, the exchange agent will have different buying and selling rates so the fall will have to be significant before you actually see their buying rate get below what you'd be paying. I would not be surprised if you have to use a different agent to sell through.

I don't dispute for a moment that some of the activity in the city is much more questionable.

OK, Firstly, I genuinely don't have any concept of why speculating against Sterling has anything to do with morals or it being questionable economically.  This intrigues me.  How is it morally wrong ?

Secondly, Yes.  I'm exploiting a loophole.  I'm absolutely fine with that.  The banks can close the loophole if they choose, but all three have stated that they have no intention of doing so.  Where's the problem ?

Thirdly, Sainsbury's bank probably.  Unless it's the destitute or a charity I really don't give a shit to be honest.  It's part and parcel of what the banks are offering.  They are offering the option to cancel as a selling point.  They don't have to do that, it's part of their package to attract your custom.  The rates they are offering are also slightly below what you can get elsewhere, so I'm quite sure they know exactly what they are doing.  They are speculating that they will gain more on the extra business at a more beneficial rate to them than they might lose in the event of a slump of Sterling.  These are major players in international finance - I'm not trying to con a pensioner out of her savings !

Fourthly, if the pound slumps, I have no intention of trying to sell the Euros back.  I'm planning on keeping them to go on holiday with later in the year.  If the pound rallies then I cancel my order and buy another lot closer to the date at the more favourable exchange rate.

There is no loophole.  You are free to do with your money as you please within the law.  The foreign exchange agent does not control the rate they merely provide you with a mechanism to exchange the currencies and typically make their money by taking a spread on the exchange rate.  

You have no moral or legal obligation to 'defend' your currency.  Governments try to do it as it can appear that they are weak to the voting population but in reality they cannot control it as an exchange rate is simply how much someone else is willing to pay for your currency.  It is analogous to the guitar market.  It's only worth what someone will pay.....