Exchange Rates

Financial, legal, advertising, pricing, marketing, accountancy, bookkeeping, employment, taxation, etc.
Post Reply
User avatar
Framerpicture
Posts: 898
Joined: Thu 18 Jan, 2007 2:38 pm
Location: Somerset
Organisation: Picture Framing
Interests: Mountain Biking, Walking,
Contact:

Exchange Rates

Post by Framerpicture »

I buy from a couple of suppliers in Europe and although the pound is now streghening slightly against the Euro (todays rate 1.16 - on Nov 2nd it was 1.13), why, when this currency is in so much turmoil, is the pound not stronger?
Were lead to believe Britain is supposed to have the austerity measures in place to help with our massive deficit and to me, (someone who could write their knowledge of economics on a postage stamp) it would seem the exchange rate is being kept low? I couldn't explain how or why this is being done but can see the advantage of a low exchange rate to the export market and perhaps to deter imports?

I'd be interested in others views
http://www.churchgategallery.co.uk/
Follow us on Twitter@PorlockArt
Graysalchemy

Re: Exchange Rates

Post by Graysalchemy »

I think you hit the nail on the head exports. We need to export to have a strong economy and whilst the eurozone is suffering it seems logical to make us seem attractive to them.
Not your average framer
Posts: 11014
Joined: Sat 25 Mar, 2006 8:40 pm
Location: Devon, U.K.
Organisation: The Dartmoor Gallery
Interests: Lost causes, saving and restoring old things, learning something every day
Location: Glorious Devon

Re: Exchange Rates

Post by Not your average framer »

The British govenment is busy printing lots of money. This causes inflation and helps to reduce British govenment debits. It also reduces the value of the pound.

As for exporting, what is produced in Britain these days? To create exports you have to be producing something. I don't think that we do much of that these days!
Mark Lacey

“Life is short. Art long. Opportunity is fleeting. Experience treacherous. Judgement difficult.”
― Geoffrey Chaucer
User avatar
Jonny2morsos
Posts: 2231
Joined: Wed 12 Mar, 2008 10:28 pm
Location: Lincs
Organisation: Northborough Framing
Interests: Fly Fishing, Photography and Real Ale.
Location: Market Deeping

Re: Exchange Rates

Post by Jonny2morsos »

Whilst appreciating the points above especially regarding making goods paid for in our currency look attractive I cannot see why the pound is not a lot stronger given the turmoils in the Eurozone.

Anyone else get the feeling that there are really only two key players in the Eurozone?
User avatar
Framerpicture
Posts: 898
Joined: Thu 18 Jan, 2007 2:38 pm
Location: Somerset
Organisation: Picture Framing
Interests: Mountain Biking, Walking,
Contact:

Re: Exchange Rates

Post by Framerpicture »

Not your average framer wrote:The British govenment is busy printing lots of money. This causes inflation and helps to reduce British govenment debits. It also reduces the value of the pound.

As for exporting, what is produced in Britain these days? To create exports you have to be producing something. I don't think that we do much of that these days!
I take your point about quantitve easing but isn't the ECB printing lots of money as well?

Regarding exports, although we are a net importer, I think you might be forgetting a few compainies such as BAE systems the worlds largest arms dealers!

According to HMRC website

"The total value of UK exports for the 12 months ending June 2011 was £280,343m, an increase of £36,540m (15.0 per cent) compared to the 12 months ending June 2010

The total value of UK imports for the 12 months ending June 2011 was £379,387m, an increase of £48,879m (14.8 per cent) compared to the 12 months ending June 2010
http://www.churchgategallery.co.uk/
Follow us on Twitter@PorlockArt
Not your average framer
Posts: 11014
Joined: Sat 25 Mar, 2006 8:40 pm
Location: Devon, U.K.
Organisation: The Dartmoor Gallery
Interests: Lost causes, saving and restoring old things, learning something every day
Location: Glorious Devon

Re: Exchange Rates

Post by Not your average framer »

The increases in values of imports and exports probably need to be seen in the light of the reduced buying power of the pound. What a pound will buy tells you a lot more about it's true value or worth.

It is true that BAE Systems is one of our major exporters. I used to work for the long demised "Thorn EMI Systems and Weapons" and can tell you that the UK defence industries used to be our biggest exporting sector of the UK's industry.

I have no idea about the size of our defence industries at the present time, but since we are busy down sizing so much of our armed forces, things probably aren't what they once were!
Mark Lacey

“Life is short. Art long. Opportunity is fleeting. Experience treacherous. Judgement difficult.”
― Geoffrey Chaucer
User avatar
GeoSpectrum
Posts: 2151
Joined: Fri 01 Oct, 2010 11:49 am
Location: Lincolnshire
Organisation: Ashcraft Framing
Interests: Family, x-country skiing, wine, art, Jazz
Location: Gainsborough, Lincolnshire
Contact:

Re: Exchange Rates

Post by GeoSpectrum »

40% of uk exports are into the eurozone which is a weak market so exports are lower which means less profit for uk buisness and therefor lower tax revenue for the government so the pound is less attractive so it is devalued. or something like that.
Alan Huntley
Ashcraft Framing
Bespoke Easels and Self-assembly tray frames
http://www.ashcraftframing.co.uk
User avatar
AllFramed
Posts: 282
Joined: Tue 17 Aug, 2010 1:20 pm
Location: In Hampshire in the New Forest
Organisation: AllFramed
Interests: Framing, Photography, The Clarets, Chateau Musar

Re: Exchange Rates

Post by AllFramed »

I wondered exactly the same, however, according to Robert Peston it is down to the Germans:

"Second, the UK has a currency that adjusts to the competitive strength or weakness of the UK economy alone, whereas - arguably - the exporting businesses of Spain and Italy are forced to sell overseas at higher prices than they would ideally like because the euro's value is determined by the perceived robustness of Germany's formidable manufacturing capacity."

The skiing holiday will be out for a while longer then...... :(
There's more to the picture, than meets the eye. Hey hey, my my.
Not your average framer
Posts: 11014
Joined: Sat 25 Mar, 2006 8:40 pm
Location: Devon, U.K.
Organisation: The Dartmoor Gallery
Interests: Lost causes, saving and restoring old things, learning something every day
Location: Glorious Devon

Re: Exchange Rates

Post by Not your average framer »

It is well to recognise the effect that exchange rate variations will have upon our businesses. As our material cost increase due to exchange rate variations, we need to understand how to balance the need to maintain profitability and yet to maintain sales volumes. The two are conflicting requirements. Get the balance wrong in either way and we will suffer.
Mark Lacey

“Life is short. Art long. Opportunity is fleeting. Experience treacherous. Judgement difficult.”
― Geoffrey Chaucer
User avatar
Framerpicture
Posts: 898
Joined: Thu 18 Jan, 2007 2:38 pm
Location: Somerset
Organisation: Picture Framing
Interests: Mountain Biking, Walking,
Contact:

Re: Exchange Rates

Post by Framerpicture »

I suppose the breakdown of the Eurozone is not unconcievable and once the PIGS ( and a few otherrs) have been ejected the currancy could be very strong again based on Germany's manufacturing capacity and this is why it maintains its value?
http://www.churchgategallery.co.uk/
Follow us on Twitter@PorlockArt
misterdiy
Posts: 885
Joined: Sun 13 Jun, 2010 9:15 pm
Location: Isle of Wight
Organisation: Decormount
Interests: Picture framing, mount-cutting, photoshop et al
Location: Isle of Wight
Contact:

Re: Exchange Rates

Post by misterdiy »

Well I heard that our currency is strengthening slightly against the euro, but the Fx dealers are increasing their margins so that we dont see any difference. Bit like the petrol really. Quick to go up slow to come down. Greed.

However now that there are extensions to the PIGS economies, like France, then the euro is getting really shaky. Sterling is predicted to become the safe haven for cash so our currency will apreciate. Interest rates could then increase and economic activity slow down further. It's all a right mess.

Germany are (rightly) getting fed up with bailing everyone out at their expense, but they don't want the euro to collapse because the Deutschmark will become so expensive that it will price their exports out of the market

It's difficult to see a way out of this to be honest.
Post Reply