Sterling.

[erol]

erol, £ up against € today as a result of German election result and other European nations advocating exit from EU. Where will various currencies end up in value, who knows? Be calm buddy.

Yes it is up and long may that continue. Lets hope it does indeed eventually recover the kind of value it had previous to the Brexit vote. When it does I will then have a reasonable idea of for how long that result cost me in terms of how much less stuff my sterling income buys. Still a considerable ways to go yet. Can you spot on the graph above when the vote was ?

[tomsteel]

erol, yes I can. But as stated previously, being mere pond-life, I cannot affect whatever decisions are made, ergo I just get on with life. If the TRNC Government raises import tax, fuel tax, mobile tax or whatever other tax, if I want to live here, I will just have to pay the price. Life is too short!

[Groucho]

Erol, your graph conveniently only shows a start just before the vote... so how far do you have to go back and show that it's higher now than it was some time before the vote?

When we moved here in 2005 we often only got 2.4tl to the £... now it's nearly double that. So our UK income has virtually doubled vs TL in the intervening period - albeit with notable ups and downs... mostly as a result of currency speculations taking advantage of political uncertainty to skim-off profits at the expense of the man in the street.

Expecting an unabated rise in the value of the GBP is unrealistic.

[erol]

Erol, your graph conveniently only shows a start just before the vote... so how far do you have to go back and show that it's higher now than it was some time before the vote?

Not really it shows about a one year before the vote and about 1.5 year after it.

When we moved here in 2005 we often only got 2.4tl to the £... now it's nearly double that. So our UK income has virtually doubled vs TL in the intervening period - albeit with notable ups and downs... mostly as a result of currency speculations taking advantage of political uncertainty to skim-off profits at the expense of the man in the street.

Look currencies have value and how much they have relative to others changes. Blaming those changes on 'speculators' is nonsense over anything but the shortest of terms in my view. When value changes between a pair of currencies it can be because of events in one country or the other (an earthquake in one, or a coup in the other). The TL in and off itself is a volatile currency thus is not a good benchmark if what you are trying to see is what the effects on the value of sterling have been because separating out what has been caused by Turkish things from UK ones is hard. Better to compare against a more stable currency and better still to compare against a basket of less volatile major currencies.

The above is the value of sterling against a basket of other currencies since 1990 to date. Look at the '80' horizontal line and the times sterling has fallen below this and for how long. 1992 - sterling crashes out of the ERM, lamont / major try raising interest rates to 15 % etc etc. This led to a fall in the value of sterling to close to but not under the 80- line. Took about 4 years for sterling to recover the value lost at this point. The 2008 - global crisis, sterling falls to under the 80 line because even though the crisis was global, we reacted slower than others. US pumped in 700bn of QE almost immediately and we took longer to do so. So sterling drops under the 80 line but even then does climb back above it within months and average over it from 2008 to around 2014 none the less, only dropping below it 'briefly'. By 2014 recovery is clear and sterling consistently stays well above the 80 line from 2014 right up until the brexit vote. Since then it has stayed consistently under this 80 line. I hope it soon recovers above it but to date is has not, to date it has stayed under the 80 line consistently for over a year since the vote - something that has never happened before over such a long period.

Expecting an unabated rise in the value of the GBP is unrealistic.

Who is expecting that Groucho ? Not me. I would love to see Sterling regain the value it lost as a result of the Brexit vote but I will not believe or accept it has until it has, that is all. Nor will I try and deny that Brexit caused a 'historic' loss in the value of sterling and that loss has yet to be regained because reality actually matters to me.

[Groucho]

Erol,

What I don't get is your obsession with the value of the GBP vs the Euro... I don't see many people here using Euros, paying in Euros and getting paid in Euros - so what gives?

Are you paid in Euros or GBP or TL?

[erol]

Erol,

What I don't get is your obsession with the value of the GBP vs the Euro... I don't see many people here using Euros, paying in Euros and getting paid in Euros - so what gives?

Are you paid in Euros or GBP or TL?

The graph above is not Sterling against the euro its sterling vs a basket of other major currencies.

There is no obsession with the GBP vs Euro rate per se but as far as what it is that I am trying to gauge and understand, based on actual evidence rather than what I want to believe, then the GBP vs Euro is the clearest 'pair' example I can use. What I am trying to fairly gauge and understand is how much value, how much purchasing power each pound I get and have has lost as a result of the brexit decision (which is made and happening and outside my control to influence). One way of doing that is to remove as far as possible the effects caused by things going on in the currency I am comparing with (like coups, earthquakes etc in that country). The best way of doing that is compare sterling not to a single currency but to a basket of currencies, which is what the 17 year graph above does.

Another way is taking my 'personal' experience as well. I do and have for a long time bought cat food in the South often using Sterling income as my source currency. It is just a fact that from the day after the Brexit vote and still today I am getting 15-20% less cat food for every pound I spend and this has been the case consistently since the brexit vote and continues still today and the overwhelming cause of this is that Sterling has lost significant value since the brexit vote. Sure there have been movements between the sterling and the euro for other reasons since then but none of them are any where near the scale of loss that resulted directly and immediately after the vote and are smaller movements both up and down. The effect on how much cat food I get per pound of sterling spent is immediate and clear and easy to see in this way.

However the same is also true even if I buy my cat food in TL using Sterling as the source income- it is just that it is much harder to see the correlations when in TL but just because it is harder to see that does not mean my sterling has NOT lost value post Brexit. Sterling lost value as a result of Brext and the TL lost even more value as a result of entirely different issue that are specific to Turkey. So it may look like the net effect is I am getting more 'cat food' when bought in TL using Sterling as the source than pre Brexit. This is an illusion because in reality the cat food sold in TL is not produced or paid for in TL. It is produced and paid for in Euros. So when the the TL plunges the price of cat food will go up. It will not go up immediately as there will be stock in supply chains bought at the older price and this will take to wind through the supply chain, thus obscuring time wise the price increase. However the relationship is the same over time, TL plunges , cat food price in TL goes up by same amount TL drops vs Euro and even though my Sterling goes up vs the TL as well it does NOT go up as much as the price of cat food goes up, because Sterling has also lost value and the net result is I still end up getting around 15-20% less cat food for each pound of sterling spent even when bought in TL. Basically the effect is the same if I buy cat food in TL or Euro, just in euro it is easier and clearer to see this and its relationship to the value lost by sterling post Brexit than when I buy in TL. Either way the reality is my sterling post brexit is buying me less cat food (or anything else) than it was before brexit by around 15-20% and this has consistently been the case since Brexit and is still the case today despite the 'year high' values today of Sterling vs either the Euro or TL or any other currency. I hope the value of my pound does soon go up to the kind of levels it had against 'all' other currencies and if and when it does it will show on that graph above as consistently being above the '80 line' in the graph above. This has NOT happened yet, that is just fact.

[erol]

Are you paid in Euros or GBP or TL?

My biggest single personal income stream is in Sterling, thus that is why the real underlying value of each pound I have is of personal direct interest to me. The pound HAS lost value as a result of the Brexit vote. That the TL has also lost even more value itself for entirely different reasons only really helps me if I am buying good in TL that are themselves produced by costs that are entirely in TL and not Euros or dollars, which is basically next to nothing. So the effect of the loss in the value of my pounds caused by Brexit, when I buy in TL say helim may be minimal because the the TL lost even more value. However if I buy a car or a TV or cat food or Heinz ketchup or South African wine in TL the effect of the loss of value in Sterling caused by Brexit is not different from if I buy such things in Euros (or dollars or Swiss franks or yen), once the 'supply chain' has wound through.

[Groucho]

Are you paid in Euros or GBP or TL?

My biggest single personal income stream is in Sterling, thus that is why the real underlying value of each pound I have is of personal direct interest to me. The pound HAS lost value as a result of the Brexit vote. That the TL has also lost even more value itself for entirely different reasons only really helps me if I am buying good in TL that are themselves produced by costs that are entirely in TL and not Euros or dollars, which is basically next to nothing. So the effect of the loss in the value of my pounds caused by Brexit, when I buy in TL say helim may be minimal because the the TL lost even more value. However if I buy a car or a TV or cat food or Heinz ketchup or South African wine in TL the effect of the loss of value in Sterling caused by Brexit is not different from if I buy such things in Euros (or dollars or Swiss franks or yen), once the 'supply chain' has wound through.

Oh well I'd stop eating cat food mate...

[erol]

Oh well I'd stop eating cat food mate...

Indeed if all I bought with my sterling income was say locally produced helim where all the input costs of producing that helim were based in TL and only TL , then the argument that all the value I have lost on my sterling since Brexit has been mitigated by the even greater fall in the value of TL over the same period, would indeed hold some water. Unfortunately I buy and have to buy alot more things that just locally produced Helim with my sterling, be they priced in TL or Euros, things like fuel and electricity and and and and. On all these things the argument that TL has fallen even more than sterling and thus has mitigated any loss in my sterling is just bogus.

[silverfir]

Groucho, stop winding him up for gawd's sake

[TRNCVaughan]

£ touched 4.80tl this morning.
Is this the £ on the way up, or the tl on it's way down or a bit of both?

[13roman58]

The reason that the TL is falling is because the Yanks have indicated a rate rise before the end of the year and the UK have also hinted at the same so both are strong at the moment but the Turkish government have also indicated that they want a rate rise so watch out

[TRNCVaughan]

Time to change some £ into tl, then?

[waddo]

I got ahead of the game this morning and changed another £10.00 just in case!!!! I know Keith, I know but if you have it you may as well spend it - lol.

[silverfir]

Waddo, you are awful.......but I like you (Dick Emery)

[Hedge-fund]

Forget exchange rates. To get a real grasp of how an economy is performing on the world stage follow the price of cat food.

[erol]

Forget exchange rates. To get a real grasp of how an economy is performing on the world stage follow the price of cat food.

Scoff all you like but how much cat food you can purchase here in euros or TL for each pound sterling you have is indeed a very good way of seeing how much real value sterling has lost or gained, free of all the sophisticated jargon BS that financial experts often spout when trying to push their own agendas but make out they are not doing so. Nor is it a particularly 'innovative' approach, being in essence no different from the well established 'big mac' index https://en.wikipedia.org/wiki/Big_Mac_Index .

[jofra]

Puts me in mind of a couple of (self-devised) light-hearted(?) scales - or indexes/indices(?) - by which I judge small towns and local areas - they can be applied either together or individually...
1. It's now "fashionable" for big cities to have "Quarters" - e.g. "Theatre Quarter", "Business Quarter", "Science Quarter", "Gay Quarter" etc. When a small town descends to naming "Quarters" (which can be as little as ~1000 square yards!), it's desperately trying to maintain an identity - and even existence....
2. When a McDonalds opens up, the area is descending into the realm of little more than a cheap fast food area - but when McDonalds then close down and move out - then the area is perilously near rock bottom...!
Sadly both of the foregoing accurately apply to a nearby small market town (since ~1300), thriving until a couple of decades ago, but recently listed in the media because over 25% of the shops are now standing empty, while the once-busy and large market has at least managed to return from just TWO stalls - to six!

[Groucho]

Forget exchange rates. To get a real grasp of how an economy is performing on the world stage follow the price of cat food.

Scoff all you like but how much cat food you can purchase here in euros or TL for each pound sterling you have is indeed a very good way of seeing how much real value sterling has lost or gained, free of all the sophisticated jargon BS that financial experts often spout when trying to push their own agendas but make out they are not doing so. Nor is it a particularly 'innovative' approach, being in essence no different from the well established 'big mac' index https://en.wikipedia.org/wiki/Big_Mac_Index .

Well I don't scoff cat food.... in fact we to buy 99% fresh foods and prepare them from scratch... btw scratch is not the name of our cat...

[Hedge-fund]

Forget exchange rates. To get a real grasp of how an economy is performing on the world stage follow the price of cat food.

Scoff all you like but how much cat food you can purchase here in euros or TL for each pound sterling you have is indeed a very good way of seeing how much real value sterling has lost or gained, free of all the sophisticated jargon BS that financial experts often spout when trying to push their own agendas but make out they are not doing so. Nor is it a particularly 'innovative' approach, being in essence no different from the well established 'big mac' index https://en.wikipedia.org/wiki/Big_Mac_Index .

I was not scoffing - I'm not sure what scoffing is actually.

I have tried very hard to explain something politely but was called patronising and you kept on about cat food. I have no agenda and take offence at the suggestion that I do. I told you I'm a retired trader and was merely trying to inform and provide substance. But heyho - I see we are moving onto mcdonalds now so maybe we can feed our cats hamburgers and everyone's happy.

[Keithcaley]

...AND, whilst we're at it...

Do Hamburgers actually contain HAM? - or BEEF?

[jofra]

If you struggle far enough through this, you'll see that apparently its name refers to Hamburg .... and when America got involved, "Hamburg Steak"!
- Not to be confused with the urban legend of JFK claiming to be a doughnut - "Ich bin ein Berliner"....

[erol]

I was not scoffing - I'm not sure what scoffing is actually.

scoff1
skɒf/Submit
verb
1.
speak to someone or about something in a scornfully derisive or mocking way

I have tried very hard to explain something politely but was called patronising and you kept on about cat food.

Yes you have tried very hard as far as I am concerned to convince yourself, me or others that :-

The effect on the value of Sterling post Brexit are mere 'peripheral damage to the odd holiday maker or expat [and] are not even on the radar.'

"The brexit vote has not caused a 15% devaluation in your purchasing power."

"The brexit vote uncertainty had some impact but this is diminishing"

"You are seeing less bang for your buck (or sterling) but it's not mostly brexit related"

Whilst also throwing in irrelevancies and distractions like "currencies trade in pairs" and "let me explain how to hedge against currency movements" and "do not gamble with money you can not afford to loose" and the like and stating that if only the Chancellor and the Bank of England governor were as wise and insightful as you then there would have been no substantial loss of value in Sterling post the brexit vote.

Well I just am not 'buying' your claims. I am not 'buying' them because I just do not see any evidence to support them, not in the 20 year charts that track the value of sterling against a basket of other major currencies nor in the real world personal experience of how much cat food, or anything else, each of my pounds buys post the vote vs pre it. I personally think you show a clear agenda of trying to get people (yourself, me or others) to believe that effect to date on the value of sterling, on how much stuff a pound of sterling can be exchanged for, post the brexit vote is really not that different from what it was before the vote, or was not a consequence of that vote, regardless and despite all actual hard evidence to the contrary. It is a simple undeniable fact that each pound sterling I have is buying me less stuff, around 15-20% less stuff from the day the brexit vote came in through to today. I understand you may not like this reality, may not want it clearly shown and understood but it remains a reality none the less as far as I am concerned. I have and had my own views on Brexit as we all do but I have never consciously placed truth lower than such personal views and I lament that so many others , remain and leave alike, have and continue to do so.

[Hedge-fund]

I was not scoffing - I'm not sure what scoffing is actually.

scoff1
skɒf/Submit
verb
1.
speak to someone or about something in a scornfully derisive or mocking way

I have tried very hard to explain something politely but was called patronising and you kept on about cat food.

Yes you have tried very hard as far as I am concerned to convince yourself, me or others that :-

The effect on the value of Sterling post Brexit are mere 'peripheral damage to the odd holiday maker or expat [and] are not even on the radar.'

"The brexit vote has not caused a 15% devaluation in your purchasing power."

"The brexit vote uncertainty had some impact but this is diminishing"

"You are seeing less bang for your buck (or sterling) but it's not mostly brexit related"

Whilst also throwing in irrelevancies and distractions like "currencies trade in pairs" and "let me explain how to hedge against currency movements" and "do not gamble with money you can not afford to loose" and the like and stating that if only the Chancellor and the Bank of England governor were as wise and insightful as you then there would have been no substantial loss of value in Sterling post the brexit vote.

Well I just am not 'buying' your claims. I am not 'buying' them because I just do not see any evidence to support them, not in the 20 year charts that track the value of sterling against a basket of other major currencies nor in the real world personal experience of how much cat food, or anything else, each of my pounds buys post the vote vs pre it. I personally think you show a clear agenda of trying to get people (yourself, me or others) to believe that effect to date on the value of sterling, on how much stuff a pound of sterling can be exchanged for, post the brexit vote is really not that different from what it was before the vote, or was not a consequence of that vote, regardless and despite all actual hard evidence to the contrary. It is a simple undeniable fact that each pound sterling I have is buying me less stuff, around 15-20% less stuff from the day the brexit vote came in through to today. I understand you may not like this reality, may not want it clearly shown and understood but it remains a reality none the less as far as I am concerned. I have and had my own views on Brexit as we all do but I have never consciously placed truth lower than such personal views and I lament that so many others , remain and leave alike, have and continue to do so.

At great effort I will not rise to your personal attack. I was brought up to be polite.

We disagree on the effect of brexit but there is no need to get personal - this is a poster lead forum where ideas are exchanged and discussed.

You have let yourself down and embarrassed yourself and I hope at some time in the future you manage to see there are other genuinely held opinions that differ from your own. In the meantime I will refrain from replying to you on this topic.

[erol]

At great effort I will not rise to your personal attack. I was brought up to be polite.

Try looking at your first comment in this thread. Polite and non personal ? Really ?

We disagree on the effect of brexit but there is no need to get personal - this is a poster lead forum where ideas are exchanged and discussed.

You have let yourself down and embarrassed yourself and I hope at some time in the future you manage to see there are other genuinely held opinions that differ from your own. In the meantime I will refrain from replying to you on this topic.

I have no problem with people having different opinions to me. I am sceptical about the motives for your claims not because your claims represent different views to mine but because you appear to simply avoid and distract from any points made that do not fit your views rather than dealing with them head on. You claim that the effects on sterling post the vote are not a result of the vote but the result of 'other things' , yet not once in this discussion to date have I seen any explanation from you as to why, if the effect on the value of sterling is not primarily a result of the brexit vote then why did it happen exactly when the vote happened ? If the fall in value was the result of 'other things' as you keep claiming then why is there no correlation with when these other things happened and movements in the value of sterling, like there was for the vote result itself ? Why did you not answer the question 'if the vote had gone the other way would I have got less 'stuff' (cat food) for each pound spent from the day the vote result came in through to today ? It is not that you hold different views to me that is problematic to me, it is that as far as I can see you have not provided any logic or reason or evidence that supports your claims or addresses the evidence that I have provided to support mine. When someone behaves in such a manner I inevitably seek to try and understand why. This is what I think and I state it openly and honestly, You may think doing that is impolite and an 'embarrassment' but I do not.

Tell me that you think that the Brexit result was is and will be a good thing for the UK and I accept that as your opinion, different from mine. Tell me as a matter of fact that the brexit vote did not result in Sterling loosing any significant value and that the bulk of the value lost and the continuation of that lost value from the day of the vote to today is the result of other things and I will ask you for evidence. Keep saying it without providing any evidence or logic that I can understand or see whilst avoiding or scoffing at any evidence I supply and I will invariably start wondering why that is the case.

[TAC]

...AND, whilst we're at it...

Do Hamburgers actually contain HAM? - or BEEF?

If buying in France I would say horse

[erol]

The fall in sterling was the expectation that the BoE would scorch the earth and they did. This was their (totally wrong) reaction to bexit and it massively impacted the value of sterling (by 11% as previously explained) so if you want anyone/anything to blame for your current situation blame the BoE reaction.

They have accepted their error and will start to unwind what they did in November so the pound will pick up from then on.

Still waiting for this predicted 'pick up' of sterling, supposedly due last November As of time of posting this 1 GBP =1.11665 , 1 GBP =1.30225

[EnjoyingTheSun]

The fall in sterling was the expectation that the BoE would scorch the earth and they did. This was their (totally wrong) reaction to bexit and it massively impacted the value of sterling (by 11% as previously explained) so if you want anyone/anything to blame for your current situation blame the BoE reaction.

They have accepted their error and will start to unwind what they did in November so the pound will pick up from then on.

Still waiting for this predicted 'pick up' of sterling, supposedly due last November As of time of posting this 1 GBP =1.11665 , 1 GBP =1.30225

Currency prices are like share prices, based on confidence and expectation and with Brexit no one can be confident in the expectation.
Which is why you get internet firms who have yet to make a profit have huge share prices whereas you have other companies that post good profits have a share price of less than their asset value.
Turkey didn’t actually get 15% poorer in May but traders speculating can make it seem so.

[erol]

Turkey didn’t actually get 15% poorer in May but traders speculating can make it seem so.

Try telling that to anyone (person. business, government) who's income in based in TL and who's expenses / costs are based in other currencies. Tell the worker here, paid in TL who rent is in euros that they have not really got 15% poorer and it is just some speculative prediction by currencies traders as to how much poorer they might get in the future that does not really effect them.

[EnjoyingTheSun]

Turkey didn’t actually get 15% poorer in May but traders speculating can make it seem so.

Try telling that to anyone (person. business, government) who's income in based in TL and who's expenses / costs are based in other currencies. Tell the worker here, paid in TL who rent is in euros that they have not really got 15% poorer and it is just some speculative prediction by currencies traders as to how much poorer they might get in the future that does not really effect them.

I’m not saying people didn’t get poorer but Turkey the nation didn’t suddenly become 15% less profitable compared with the UK in a month.
It’s just people gambling and with enough money behind them they can influence the result.
The best hand in poker doesn’t always win the pot.

[erol]

I’m not saying people didn’t get poorer but Turkey the nation didn’t suddenly become 15% less profitable compared with the UK in a month.It’s just people gambling and with enough money behind them they can influence the result.The best hand in poker doesn’t always win the pot.

I really have no idea what point you are trying to make to be honest. It seems like your argument is that exchange rates should not be of interest or concern to people as they are just some kind of gambling that does not reflect any underlying reality or effect the underlyiong economy of a country and as such are only of interest or concern to those actually doing the gambling ? Seems like nonsense to me.

Turkey did not suddenly become 'less profitable' you say. Yet Erdogan did appoint his son in law as finance minster, did dismiss the former Merrill Lynch banker Mehmet Simsek from the finance ministry and will be taking much more direct control of the Turkish central Bank. These things do and will have an effect on how 'profitable' Turkey is or is not, in reality, compared to other countries and the markets view (speculation) is that these things that have happened in the real world will have a negative effect on that 'profitability' , a view I personal can not say I disagree with.

In any case none of this has to do with my reviving of this thread. I revived it because HF had claimed that the bulk of the drop in value of sterling following the referendum vote was not down to the vote result, but down to the incompetent actions of the remain supporting chancellor and governor of the BoE making bad decisions, that he claimed back last year they had recognised were bad decision, were reversing and on that basis predicted that would lead to sterling 'picking up' from november last year. I was juts pointing out that no such pick up has happened to date and if anything the reverse is the case.

[EnjoyingTheSun]

I’m not saying people didn’t get poorer but Turkey the nation didn’t suddenly become 15% less profitable compared with the UK in a month.It’s just people gambling and with enough money behind them they can influence the result.The best hand in poker doesn’t always win the pot.

I really have no idea what point you are trying to make to be honest. It seems like your argument is that exchange rates should not be of interest or concern to people as they are just some kind of gambling that does not reflect any underlying reality or effect the underlyiong economy of a country and as such are only of interest or concern to those actually doing the gambling ? Seems like nonsense to me.

Turkey did not suddenly become 'less profitable' you say. Yet Erdogan did appoint his son in law as finance minster, did dismiss the former Merrill Lynch banker Mehmet Simsek from the finance ministry and will be taking much more direct control of the Turkish central Bank. These things do and will have an effect on how 'profitable' Turkey is or is not, in reality, compared to other countries and the markets view (speculation) is that these things that have happened in the real world will have a negative effect on that 'profitability' , a view I personal can not say I disagree with.

I don’t think my point is that complicated really.
Nowhere did I say that exchange rates are not important.
What I am saying is that the exchange rate is more governed by currency speculation based on the market makers bet on the future economic situation of a country than the present reality. Eg Erdogan’s son in law. Who knows he might be a financial genius? I won’t take that bet but it’s future expectation rather than present reality.
If you throw enough money at a problem you can change the exchange rate.
Eg share prices are a share of a company’s assets including profits. Most share prices bear little relationship to that and are more based on expectation.

[EnjoyingTheSun]

In any case none of this has to do with my reviving of this thread. I revived it because HF had claimed that the bulk of the drop in value of sterling following the referendum vote was not down to the vote result, but down to the incompetent actions of the remain supporting chancellor and governor of the BoE making bad decisions, that he claimed back last year they had recognised were bad decision, were reversing and on that basis predicted that would lead to sterling 'picking up' from november last year. I was juts pointing out that no such pick up has happened to date and if anything the reverse is the case.

Brexit is a big factor in the rate of the sterling and as we don’t seem to be making much progress on it we are in a state of limbo.
That said it isn’t the only factor but the biggest current factor.
If Italy crashed tomorrow like Greece did then the value of sterling would go up against the euro.
Would that mean that the UK’s economic prospects have suddenly improved?

[erol]

What I am saying is that the exchange rate is more governed by currency speculation based on the market makers bet on the future economic situation of a country than the present reality.

It is a combination of current state of economy plus pricing in of future expectations. Why would it be anything else in a free market ?

If you throw enough money at a problem you can change the exchange rate.

I think that history has shown time and time again that actually you can not do this other than in the shortest of time spans. The entity with the most money (sterling) is the bank of England and every time they have tried to force the market to reflect a value for sterling higher than that which the market believes is the actual case, by throwing money at it, they have failed. Even combinations of things like changing the interest rate (something only central bank can do) AND throwing money at it does not work, as John Major discovered to his (and our) cost.

[erol]

That said it isn’t the only factor but the biggest current factor.

Not according to HF if you read the history of this discussion. A view point that I and seemingly you disagree with.

If Italy crashed tomorrow like Greece did then the value of sterling would go up against the euro. Would that mean that the UK’s economic prospects have suddenly improved?

In such a scenario would the amount of 'cat food' (or anything) that I can buy with a pound sterling when bought with euros in the south increase ? Probably in the short term yes, but in the medium and long term probably not. Since the referendum vote how much 'cat food' I get for each of my pounds sterling, when changed to euros and bought in the south, has decreased in the range of 15-20% for the entire period since the referendum vote. From immediately after the vote through to today.

[EnjoyingTheSun]

What I am saying is that the exchange rate is more governed by currency speculation based on the market makers bet on the future economic situation of a country than the present reality.

It is a combination of current state of economy plus pricing in of future expectations. Why would it be anything else in a free market ?

If you throw enough money at a problem you can change the exchange rate.

I think that history has shown time and time again that actually you can not do this other than in the shortest of time spans. The entity with the most money (sterling) is the bank of England and every time they have tried to force the market to reflect a value for sterling higher than that which the market believes is the actual case, by throwing money at it, they have failed. Even combinations of things like changing the interest rate (something only central bank can do) AND throwing money at it does not work, as John Major discovered to his (and our) cost.

There is about three trillion traded by day in the currency markets so any country would struggle although China has done a pretty good job of keeping their currency undervalued to the distress of America.
A free market isn’t necessarily a perfect market, at the end of the day the market makers are just bookies and the favourite isn’t necessarily the best horse in the race or the eventual winner.
Sub prime mortgage bundles have the same monetary value that they had 15 years ago, pretty much zero but they were quite valuable in their day.

[EnjoyingTheSun]

That said it isn’t the only factor but the biggest current factor.

Not according to HF if you read the history of this discussion. A view point that I and seemingly you disagree with.

If Italy crashed tomorrow like Greece did then the value of sterling would go up against the euro. Would that mean that the UK’s economic prospects have suddenly improved?

In such a scenario would the amount of 'cat food' (or anything) that I can buy with a pound sterling when bought with euros in the south increase ? Probably in the short term yes, but in the medium and long term probably not. Since the referendum vote how much 'cat food' I get for each of my pounds sterling, when changed to euros and bought in the south, has decreased in the range of 15-20% for the entire period since the referendum vote. From immediately after the vote through to today.

The £ to the Euro bet is on a race that hasn’t finished yet, time will tell who was right or wrong re Brexit.

[erol]

The £ to the Euro bet is on a race that hasn’t finished yet, time will tell who was right or wrong re Brexit.

Yet from the moment the race started, through to today, I have been getting 15-20% less cat food for each pound sterling I change into euros and spend on such. That has been the real world effect on me to date as a result of the vote. Nor do I see much sign that I might be getting more cat food for my pounds any time soon. Which is all fine, I just do not like being told that I am not getting less cat food for my pounds when I am or that such less is not a result of the referendum vote when it was. I am also likely to call out people who tell me such things and then seek to show that their claims are true by making predictions that then also turn out to not be the case, which is what I did when reviving this thread.

[EnjoyingTheSun]

The £ to the Euro bet is on a race that hasn’t finished yet, time will tell who was right or wrong re Brexit.

Yet from the moment the race started, through to today, I have been getting 15-20% less cat food for each pound sterling I change into euros and spend on such. That has been the real world effect on me to date as a result of the vote. Nor do I see much sign that I might be getting more cat food for my pounds any time soon. Which is all fine, I just do not like being told that I am not getting less cat food for my pounds when I am or that such less is not a result of the referendum vote when it was. I am also likely to call out people who tell me such things and then seek to show that their claims are true by making predictions that then also turn out to not be the case, which is what I did when reviving this thread.

Obviously the Euro to the £ rate is effected by the referendum vote as it has been the biggest recent factor but that doesn’t meant that the leave vote was wrong.
Germany, France etc have more money combined than the UK and for all we know might be shorting the £ for political reasons. Herd instinct will take care of the rest.
Tomorrow China and America might decide Brexit is a good thing and support £ but that wouldn’t mean overnight the Brexit case has suddenly improved 20% would it?
There are a lot of businesses, politicians and countries that have a vested interest in us remaining in the EU it doesn’t mean it is the best thing for ordinary people.

[erol]

Obviously the Euro to the £ rate is effected by the referendum vote as it has been the biggest recent factor but that doesn’t meant that the leave vote was wrong.

I am not saying or arguing that because I have been getting 15-20% less cat food for each of my pounds from the day after the referendum vote than I was pre it, this means the vote result was 'wrong'. I am saying if you try and tell me that I have NOT been getting less cat food for my pounds since the vote , when clearly I have, then I will contest that assertion. If you tell me that the less cat food I am getting for my pounds since the vote is not primarily a function of the referendum result, when clearly it is, then I will contest that assertion.

Me getting less cat food is only one factor that is a part of any assessment with regards to was brexit a good or bad decision but it is a factor that has actually happened. Putting it up against things that may or may not yet happen in the future is to me dubious. The simple reality as I see it is that to date (and I accept that it is only to date) the actual real world effects of the vote have been for me fiscally negative, with, to date, not a single real world fiscal benefit yet that I can see. Some may see the declining numbers of EU citizens moving to the UK as a real world benefit that has already happened but I am not such a person and even if I was it would be a benefit that would be mitigated by the increase in immigration in to the UK from non EU citizens that has also happened in the same period. Sure this 'current status' may change in the future. In the next year, or next 3 years or next 15 years. That however does not change the reality of what the actual effect on me has been so far since the vote happened through to today.

[EnjoyingTheSun]

Ok Erol, what would you think should effect the value of one nations currency against another?
I would say profitability or shall we say balance of trade.
After all when we start talking money we are looking at business and profitability.
Check out the value of the Chinese Yuan against the $ over the last ten years.
It is virtually the same and has remained pretty steady.
How do you explain that when the trade defect between the two countries over the last ten years is $3.3 trillion and counting if not currency manipulation?
Re Brexit there was obviously going to be a realignment and our Euro ‘partners’ were never going to make it easy because if they do others will leave.
But at the end of the day it depends on whether you feel sovereignty is important and whether our interests are best served by following others best interests. Also if you feel bureaucrats know what is best for business or one countries social experiments should be thrust on everyone.
The Common Agricultural Policy was great for France, the EU helped Greece continue their expenses paid holiday but I am still waiting for our big pay off.
In world trade we import more than we export so are a very good customer. In business people can usually accommodate good customers.

[sophie]

I have desperately tried (twice) to follow this thread and have come to the conclusion that I must be as thick as two short planks, because you guys have lost me. Now, this has only happened once before in my life i.e I tried to make a stab at learning latin and got nowhere. So this morning I went into Girne, did a bit of what I needed to do, then had a delicious iced latte and pootled back home, put my feet up, had a Vodka and coke with plenty of ice and decided that I must be like the orchestra that kept on playing whilst the Titanic went down. I do what I can with what this Government has very kindly left me after bleeding me dry of most of it and they will hopefully leave enough to bury me, but not holding my breath.

[erol]

Ok Erol,....

Stating that governments, with control of interest rates, import and export tarrifs, capital control, foreign investment controls in and out etc etc etc can to a degree manipulate their own currencies is very different from stating "If you (anyone?) throw enough money at a problem you can change the exchange rate (any currency)". In terms of China's current manipulations and despite what Trump may bombast to his core audience, it would seem that as far as there is effort on the part of the Chinese government to artificially affect the value of the RMB vs Dollar and other currencies it is to make its value higher and not lower.

https://www.pbs.org/newshour/world/fact ... e-currency

https://www.forbes.com/sites/timworstal ... 89c1ea63e8

But at the end of the day it depends on whether you feel sovereignty is important and whether our interests are best served by following others best interests.

I have a reluctance to discuss my views on Brexit here as pretty much every time I have done so in the past I have come to regret it. Having said that my view is that the whole debate has been (largely by design imo) dominated by simplistic and largely meaningless slogans like 'take back control' and 'sovereignty'. Yes 'sovereignty' is important as is the 'trading' of it for benefit. Every trade deal between a sovereign nation and another party, every treaty, every international agreements by definition involves the trading of some degree of sovereignty in exchange for some perceived benefit. membership of the WTO involves a loss of sovereignty. Any and every trade deal the UK does in the future with anyone will involve a loss of sovereignty. The only way for a nation to have total sovereignty is for it to isolate itself entirely from the rest of the world. For me the national debate around sovereignty in terms of Brexit has not been based of an adult recognition of these realities that then seeks to evaluate if the sovereignty we historically chose to trade for benefits is still worth it or not. For me a sensible debate would have to be about degrees of sovereignty traded weighed against perceived benefits. It has, in my personal view, been much more characterised by essentially fatuous and childish sloganeering that present 'sovereignty' as an absolute, that you either have or do not have and that if there is any agreement with the EU (but not anyone else) on anything , then you do not have it. Thus I would be happy to have a discussion about are the degrees of sovereignty trading involved in being a member of the EU worth the benefits of membership (as 27 other nation states consider they are plus those waiting for entry) or not. I am not interested in a discussion that starts with the in built assumption that if you do not support Brexit then you do not and can not believe in the importance of the sovereignty of the UK. That you must be in some way 'anti' sovereignty. That what you want is to be told what to do by others rather than decide yourself. For me the debate around sovereignty has been more about archaic nationalist notions and emotion, fuelled by rhetoric and bombast, than a calm and rational evaluation of actual benefits vs actual sovereignty surrendered held within the context of the reality that any and all agreement, past present and future, between the UK and anyone and everyone else is also such a balance, with degree being the only difference.

I am off the opinion that centralisation is not and does not have to be the polar opposite of devolved local control, with more of one having to mean less of the other. I think that it is possible to imagine and construct a system of social organisation that centralises as much as possible that which it is sensible to centralise and yet still seeks to localises as much as possible that which it is sensible to localise, with multiple scales of groupings. I think this makes sense within the union of nations that make up the UK as much as it can make sense within a wider union of nations that the UK is a part of. Wales is not sovereign and certainly not in the absolutist sense that the word is used in terms of Brexit. Nor does it need to be in order to be able to flourish and prosper to my mind. I do think that decisions that primarily effect Wales should be made in Wales but Wales does not need to be absolutely sovereign in order for this to happen. Just as I believe that decisions that primarily affect Chalfont St Giles should be made in Chalfont St Giles but that this does not require Chalfont St Giles to be absolutely sovereign.

[frontalman]

Any paragraph longer than two lines and I'm off too. Life's too short!

[erol]

Any paragraph longer than two lines and I'm off too. Life's too short!

Just for you frontalman because you appear so jolly in your profile picture Ill take the time and effort to try and say what I said above in a form hopefully more digestible to you

I think the national debate on Brexit and specifically 'sovereignty' has been based more on emotional appeals to

than it has been about

[EnjoyingTheSun]

In terms of China's current manipulations and despite what Trump may bombast to his core audience, it would seem that as far as there is effort on the part of the Chinese government to artificially affect the value of the RMB vs Dollar and other currencies it is to make its value higher and not lower.

https://www.pbs.org/newshour/world/fact ... e-currency

https://www.forbes.com/sites/timworstal ... 89c1ea63e8

You'll need to explain what you understand by sovereignty before I go into the lengthy part two of your answer Erol.
Trade is like a contract. In contract law, consideration is part of a contract. It's the bargain for a bargain part. You sell me your car, I give you money. I am struggling to see how striking trade deals effects your sovereignty anymore than me selling you my lawn mower or buying your hedge trimmer might effect me owning the title to my house and therefore my garden.


As for China manipulating it's currency let's take Trump and his bombastic announcements out along with the economists Trump bashing.
You would hopefully agree that I could easily pop up a few links from economists that say they devalue their currency and then we go down the my facts are better than your facts route.

Let's think about this ourselves as logical people.

Would you agree that a nation's currency is effected by how strong economically and at trading it is?
Eg the deutschmark was strong because Germany was an economic powerhouse?
I would find it difficult if you could argue that point tbh.

Would you agree that China does not maintain a market based floating exchange rate? The yuan is not fully convertible unlike the Euro, dollar, sterling?
Again whether they ae manipulating it up or down I don't think you can argue with that.


Do you not find it slightly strange that the yuan is virtually exactly the same as it was after ten years of trading with a three trillion dollar deficit?


Do you think it is probably most likely that China has found a level at which it finds its exports find a market in America and manipulate it's currency to keep to that price?
So if that means that it's currency is 40% undervalued then maybe on occasion they might strengthen it so it isn't 50% undervalued and allow Trump to bombast? Pretty much supply and demand.

Does that mean that if anything as your quoted economists are saying, China is trying to keep it's currency strong?
Not really.

[EnjoyingTheSun]

Any paragraph longer than two lines and I'm off too. Life's too short!

Just for you frontalman because you appear so jolly in your profile picture Ill take the time and effort to try and say what I said above in a form hopefully more digestible to you

I think the national debate on Brexit and specifically 'sovereignty' has been based more on emotional appeals to

2015-04-30-1430433806-4061989-Royal_wedding_street_parties_main_480_29april2011-thumb.jpg

British_lion_and_Union_flag.jpg

Patriotism-10.jpg

than it has been about

concentrate.jpg

Not really.
I don't think much of Corbyn but if he wins the next election with what will almost certainly be less than 50% of the population voting for him then the UK has to abide by what he wants to do until they vote him out.
But I wouldn't neccessarily want to be governed by what the German president wants unless I can directly vote for her/him.

I don't see that as Nationalism.

[EnjoyingTheSun]

Wales is not sovereign and certainly not in the absolutist sense that the word is used in terms of Brexit. Nor does it need to be in order to be able to flourish and prosper to my mind. I do think that decisions that primarily effect Wales should be made in Wales but Wales does not need to be absolutely sovereign in order for this to happen. Just as I believe that decisions that primarily affect Chalfont St Giles should be made in Chalfont St Giles but that this does not require Chalfont St Giles to be absolutely sovereign.

You have described what most people thought we were signing up for not what the EU has become.
So do we stay in it and hope that the EU becomes this benevolent group of nations despite zero evidence that is what is in it's mind for the future or get out and hope we are not beyond the point of no return.

[erol]

You'll need to explain what you understand by sovereignty before I go into the lengthy part two of your answer Erol.
Trade is like a contract. In contract law, consideration is part of a contract. It's the bargain for a bargain part. You sell me your car, I give you money. I am struggling to see how striking trade deals effects your sovereignty anymore than me selling you my lawn mower or buying your hedge trimmer might effect me owning the title to my house and therefore my garden.

If we do a trade deal on agriculture products with the US that involves us accepting the free import of chlorinated chickens and hormone feed beef not just today but in to the future, that will involve compromising our absolute sovereignty over if we allow such food stuffs to be sold in the UK or not. Once we have done that deal and for as long as we maintain it , we have traded our sovereignty over such a decision in exchange for other perceived benefits. This is exactly the basis for the argument that doing a trade deal with the EU along the lines in the recent chequers white paper on agricultural products will limit our ability to then do a deal with the US. The point is this works exactly the other way round as well. If we do a deal with the US that allows chlorinated chicken to sold in the UK that in turn limits our ability to do a deal with the EU.

Any deal between two sovereign nations or a sovereign nation and a union of such, that does not require either party to agree do something different on an ongoing basis, than they would do anyway in the absence of such an agreement, would not require an agreement at all. The only way to achieve absolute sovereignty is to isolate yourself from the rest of the world.

and then we go down the my facts are better than your facts route.

Which to me seems little different from a route where by your claims are better than mine in the absence of any facts to support either. In any case my main point here was the 'moving of the goalposts' from (to paraphrase) 'anyone with enough money can make a currency any value they want' to ' governments can manipulate their own currencies'

Would you agree that a nation's currency is effected by how strong economically and at trading it is?
Eg the deutschmark was strong because Germany was an economic powerhouse?
I would find it difficult if you could argue that point tbh.

The price of any trade able 'thing' in a free and liquid market is a function of its actual value today plus some element of speculation as to it's value in the future. So the value of the deutschmark, when such existed, was a reflection of the strength of the German economy at that point in time plus some speculative estimation as to how the strength was likely to change in the future.

Would you agree that China does not maintain a market based floating exchange rate? The yuan is not fully convertible unlike the Euro, dollar, sterling?

Yes I would agree pretty much and that again brings me back the the whole 'moving the goal posts' point. Your original assertion, as far as I understood it, was that currencies like sterling and the euro could be moved by significant amounts in a sustain way away from their value as based on the strength of the relative economies at that point in time plus an average market speculation as to their movement in the future, simply by anyone with 'loads of money'. My personal opinion when you first said that (if that is what you were saying) was that it was not true and remains so, even though we now seem to be talking about the Yuan and manipulation by Chinese government and not just someone with loads of money in relation to a currency that is free trade and convertible.
Again whether they ae manipulating it up or down I don't think you can argue with that.

Do you not find it slightly strange that the yuan is virtually exactly the same as it was after ten years of trading with a three trillion dollar deficit?

No. If it had stayed the same through that 10 year period then yes that would for me be indicative of 'price manipulations' but just that it is today at a level similar to 10 years ago no. 6 months ago is significantly different from 10 years ago. 2014 significantly different. To me it seems like you are using classic statistical 'trick' of taking exactly the points in time that show what you want to show and ignoring all other points

Do you think it is probably most likely that China has found a level at which it finds its exports find a market in America and manipulate it's currency to keep to that price?

RIght now 1 USD equals 6.767 yuan. In April it was 6.2 In Feb 2014 6.0 and ten year ago 6.8. So which of these is the 'level level at which it finds its exports find a market in America' ? If the currency is so easily manipulated why was the yuan stronger than the 6.7 it is today for all of 2011, 2012, 2013, 2014 and 2015 ? Why has it not just been 6.8 all the time ?
So if that means that it's currency is 40% undervalued then maybe on occasion they might strengthen it so it isn't 50% undervalued and allow Trump to bombast? Pretty much supply and demand.

Does that mean that if anything as your quoted economists are saying, China is trying to keep it's currency strong?
Not really.

Do not really get you. It is however a fact that in recent years China has been selling its foreign currency reserves to buy Yuan, depleting those reserves over time and it is hard to see how this action is compatible with its desire to see the Yuan fall in price vs the currencies it is now spending to buy Yuans with ?

[erol]

You have described what most people thought we were signing up for not what the EU has become. So do we stay in it and hope that the EU becomes this benevolent group of nations despite zero evidence that is what is in it's mind for the future or get out and hope we are not beyond the point of no return.

For me and I want to stress this is just my own personal opinion, no claims to be righter or better than others, I do not see much validity in the argument that 'we tried to reform the EU to make it better and failed' and thus now the only sensible option in the face of this is to leave, because I do not think we ever did try this in reality. I think we spent most of our time and effort and political capital whilst in the EU trying to secure special statuses , exceptions and such for ourselves alone. If the UK had ever been an advocate within the EU of say greater transparency within EU institutions like the the finance group of ministers, it is not something I am aware of ?