A major decline in foreign exchange in 2015

According to a major survey that was carried out in 2015, turnover in EUR/USD fell by 17% in October 2015, which translates to $640 billion per day. On the contrary, the turnover in AUD/USD rose by 8%.

A survey carried out in the key financial institutions that deal with the foreign exchange by the Bank of England has revealed that a 14% drop in trading volumes has been experienced since April 2015 and a 21% drop since a year ago. The Bank of England measures the vast volumes traded in the markets of global currency.

The survey further revealed that the average daily volume of FX that was traded in the UK in October 2015 was very huge, about 2148 billion or approximately 2.15 trillion dollars. This translates to two-thirds of the yearly GDP in the UK during an average day. This data revealed a noticeable drop in flows as compared to six months ago. However, this drop was still higher at 2481 billion.

Many of the transactions were from Foreign Exchange Swaps that are utilised by the company to circumvent against foreign currency threat in the future, which accounted for 1019 billion in total. According to the report, the huge fall between April and October was in the Spot FX market. It stated that “The turnover in all products dropped over the six months to October 2015. The FX spot turnover dropped by 24% that is $737 billion per day down to 34% during the previous year.”

Regarding the actual currency pairs, the report showed that the currency pair that dropped the most is the EUR/USD. Turnover in many currency pairs dropped. Ideally, the turnover in EUR/USD dropped by 17% in October 2015 to $640 billion every day. On the contrary, the turnover in AUD/USD rose by 8% while that in USD/CNY progressed higher, up by 3%. The largest currency pair currently is the USD/CNY.

There was no informative explanation from the report as to why trading volumes had dropped by a fifth over the last year. However, Jeremy Stretch of CIBC Capital Markets was pointed out by Yahoo Finance as using increased regulation as a factor.

Certainly, the regulation was promoted in many jurisdictions after the Swiss Franc debacle last January, after the SNB eliminated the cap on their currency leading to high losses for several brokers and their clients. This move by SNB led to regulators in the US to increase the minimum margin conditions on several institutional FX transactions, which would have resulted in an immediate drop in volumes as clients would have needed to set aside extra capital so as to receive the same leveraged volumes as compared to last year.

The elimination of the Franc’s cap resulted in several brokers being bankrupt as many traders lost their trading capital as well. This too might have had a small impact on trading volumes. Another reason that led to the drop in FX trading volumes is the dollar’s appreciation. This is because trading volumes are reported in dollars and the stronger currency translates into a reduction in overall volume as compared to using a different weaker currency to report the turnover. However, while this explains the drop in volumes during the year, an increase in the value of the reporting currency cannot elaborate the 14% drop in volumes from April 2015 as the dollar index merely changed in value from April to October 2015.

According to the BOE’s report, many of the marked drops were in Options Trading and Spot, which dropped from 973 billion to 737 billion between April and October. Spot Forwards and Options are the most preferred tools of speculators that explain why the trading volumes dropped extremely during that period.

The UK remains the key leader in the world of foreign exchange in line with trading volumes with a total turnover of 2148 billion in October.

Analysing Premier League clubs exposure to foreign exchange

There exists a single factor that is usually not recognised when the very rich clubs that belong to the English Premier League use millions of pounds for the period of the transfer window, that is, their exposure to foreign exchange.

The aspect of spending £50m on superstar midfielder may not be the most exciting aspect, but similar to all businesses, the forex is one crucial factor that requires closer attention by those who work behind the bars at football clubs. An extreme rate can simply cost millions of pounds.

In the current transfer window and economic wrangles in China, the global equity market rejects and lows in commodities have inflicted chaos all over financial markets. The Sterling has experienced great losses dramatically in the conversion from pound to euro mostly as the rate drops to a 12-month low due to plunging risk sentiment.

Since the clubs usually pay the players using the selling club’s local currency, extreme rates for pounds indicate that buying players from Europe are a huge investment by like ten percent in some cases. In the same line, the buying power of Europe has been boosted significantly.

These ridiculous rates will cost British teams several millions of pounds more than when paid in Euros during the summer window as compared to the month of January, which is a panic-buying period. The previous transfer window that closed at the end of month August, the GBPEUR high was 1.4386. Currently, the transfer window has fallen to 1.2888, which is very low.

Those that acted during the summer period are safe for feeling smug, especially when the players’ value has increased in the meantime, For instance, Manchester City’s investment in Kevin De Bruyne. This acquisition would cost significantly more than £55m that was paid during summer. A sharp spend despite it being currently injured.

To make sure that these rates are even worse for the clubs, they should be well informed when they are trading a player back to a continental club after purchasing him from one during the last transfer window, that the loss they are receiving is essential and that it does not cost them too much.

To overlook that Premier League football clubs function in a similar way to another international trading business is easy. Forgetting the currency risk is very expensive.

Could it be the end of Bitcoin transactions in Europe?

The European Commission (EC) is set to bring the anonymous transactions in virtual currencies to an end to help tracking of terror groups’ funding. To foster this, the Commission published an action plan that will help reinforce the fight against terrorism financing yesterday. It outlined information on how criminals are looking for new ways quickly that provide lower detection risk of moving their money.

There is no evidence in the plan that points out to finance terrorism being financed by virtual currencies. However, the Commission is certain that there is a possibility and feels that it is in a position to contemplate regulation as one of the continuing efforts to bring terror attacks to an end.

The plan requires the platforms that deal with virtual currency exchange to operate under the capacity of the European Anti-money Laundering Directive so as to ensure that exchanges can reveal who accessed their services and when they were used. According to the action plan, the Commission will as well inspect whether it is viable to include wallet providers of virtual currency.

Bitcoinistas should not feel like they have been left out by the EC since the action plan requires a re-think of how and when to reveal pre-loaded credit cards’ users, without minimising their utility. This is because many of these users are poor who find these cards useful instruments in financial matters because they work as credit cards without necessarily requiring the card holders to be credit-worthy. Consequently, a central register of bank accounts, as well as account holders, is required to be set up in the entire European Union member states.

Meticulous consideration of all exchanges between states and EU members that are known to be great points for money-laundering has not been left out in the action plan as well. About many government responses to situations raised by technologies, this issue remains of value, but pointless at the same time since virtual currencies create a virtue of privacy.

Bitcoin in its advice says, “To defend your privacy, there is need to utilise a new Bitcoin address whenever you accept a new payment. Also, you can make use of several wallets for various functions. In doing this, you will isolate all your exchanges and associating them with each other will not be possible. Those who send you money cannot view your other Bitcoin addresses and what you use them for. ”

Many virtual currency transactions are beyond EU’s reach in such a way that operators will find ways of cashing in cryptocurrencies within Europe. Cryptocurrencies do not allow terrorists to access funds.

British pound drops against the dollar

Amidst campaigns to determine the fate of Britain’s membership of the European Union, the pound has witnessed its sharpest decline in value since the 2008 financial crises creating a political basket of gold on both sides of the campaign.

In the four days that followed London’s Mayor, Boris Johnson, declare to support Britain’s exit from the EU; a defiance to the Prime Minister, David Cameron, the pound dropped 5cents to settle a seven-year low against the US dollar in all money exchange outlets.

The central question in the hearts of many people is whether they will be richer or poorer should Britain vote to exit. According to Cameron, Britain dropping out of the EU is like taking a leap in the dark. Meanwhile, HSBC and Goldman Sachs have cautioned that upon leaving the EU the pound could subsequently lose an extra fifth of its value.

Pro-Europeans are advising that the current hiccup in the currency is a sign of what could happen in the future should Britain decide to leave. However, the opposition has declared that voters would not give in to scaremongering carried out by independent banks that had warned of the repercussions of Britain withdrawing from the EU in the 1990’s.

According to Richard Trice, who is a supporter of the Leave.EU campaign, multinational banks are seeking to create volatility as it suits them in terms of profitability.

In the last week of February, most money exchange firms quoted the Sterling averaged at $1.3910 which was a seven-year low and heading for its worst weekly performance ever since 2009.

Following the poor performance towards the end of February, the Foreign Secretary, Philip Hammond, commented on the matter term it as a warning of the impact to come for leaving the EU. Hammond told parliament that voting to leave would create an uncertainty of the future which would further generate an adverse reaction in the financial markets.

According to the campaign supporting Britain to remain in the EU, the sterling pound could lose up to twenty percent more in value should the country decide to exit. In a nutshell, the exit would, therefore, mean that the prices of petrol, shopping, household gadgets and holidays would rise.

Britain’s relationship with its EU counterparts has been centralized on its currencies fate as well as the fact that London dominates the $5.3 trillion a day worldwide Forex market. Since the pound is one of the oldest currencies still in use, it has been an accepted symbol of Britain’s imposing might as well as a British exceptionalism.

The £ sign is utilized by the UK’s Independence Party as part of the emblem, and the Prime Minister David Cameron praised his European deal assuring it provided security for the currency. In a statement made by Cameron in regards to the deal, he said that not only had the deal permanently protected the pound and the country’s right to use it, but also ensured that Britain would not be discriminated. However, Cameron has not made any public statement regarding the fall of the sterling pound.

According to the deputy director of ‘Britain Stronger in Europe’ Lucy Thomas, the unpleasantness of the depreciating currency underlined the dangers of the country voting to leave the EU. Furthermore, the economic security of Britain would be put to risk not to mention that family finances would suffer a negative impact as well. Thomas also added that it was imperative for Britain to retain access to Europe’s 500 million customer market; just the possibility of leaving the EU has sparked a depreciation of the pound.

According to the CEO of Merlin Entertainment, Nick Varney, a weak pound would have a good effect on the British industry because it would be good for exports as well as tourism. He also added that should Britain make an exit, and the pound falls further in value, it didn’t strike him as an adverse outcome but rather a good one.

Is it now time to buy your holiday cash

Following the plummeting value of the pound, holiday makers are flooding money exchange outlets to stockpiling Euros for their holiday money amid fears of further devaluation of the pound. The possibility of Britain pulling out of the European Union has lead to a decrease in the purchasing power of the pound in other countries.

As a result, currency brokers such as Asda Money and Hifx have received overwhelming orders to supply holiday cash to families that are speculating the possibility of costs rising before Easter or summer breaks.

In comparison to the end of February 2015, 43% more Euros got exchanged by Britain’s largest currency seller, The Post Office, in the last few weeks alone. According to The Post Office, it has been selling twice the average amount of Euros for the month of March.

According to Darren Kilner, from FairFX, the past weeks have been busier than usual as customers are concerned that the EU referendum might have an impact on their holiday plans.

Just a few days ago, the Sterling pound dipped against the dollar to its lowest point since the 2009 financial crisis. One year ago, one pound exchanged for $1.51, but the devaluation has brought the exchange rate down to $1.35 per pound.

To the Euro, the pound has depreciated by 9%, and it is now trading at £1 for €1.23; a drop from €1.40 in July last year with experts predicting the collapse of the currency as the EU referendum takes place on June 23.

HSBC estimated the pound could fall further by 20% should Britain vote to leave the EU. From another point of view, USB says the pound could eventually equalize with Euro in terms of value. According to Panmure Gordon stock brokerage’s financial commentator David Buik, talk of the pound falling to a point of parity with the Euro is a bit extreme; however, it is possible that an exchange rate of €1.15 will be reached. He further added that he expected the pound to experience a sharp rise in the future.

According to a panel of neutral experts, it is advisable to visit a money exchange and buy some of your holiday money at the moment.

According to Justin Urquhart, founder of 7 Investment Management, the uncertainty of the British currency will continue to worsen until the countries stand in the EU referendum id established. He added that since it is not possible to know which way a currency will go, it would be advisable to get at least half of your holiday money now. He further stated that he could not see why the pound should gain value.

David Black, the founder of DJB Research; a financial research firm, says the currency’s exchange rate is going to fluctuate in the coming months and advises holidaymakers to estimate how much they are willing to spend and get at least half of the money now.

However, the director of Wealth Club investments, Ben Yearsley advises that should Britain gesture it wants to leave the EU the pound could further depreciate with the reverse also being the case. Thus, he does not rush to get the holiday money just yet.

Man steals £40,000 from Bureau-de-change

If you thought the era of brazen, out-in-the-open robbery was a thing of the past, think again. Recently, it was reported that a con man stole £40,000 from the safe of a supermarket in Trafford Park, Greater Manchester and simply walked out of the store without being noticed. This shocking act of theft was committed with skill and a highly refined sense of timing, ac-cording to sources. When asked to describe the robbery, an informed representative stated, “…He apparently wore a glove, knew the code for the safe, punched it in and was able to empty it. At one point a senior member of the Asda staff walked past while he was in the ki-osk and even spoke to him, but he just kept up the pretense as cool as you like.”

So, who was this man, and how was he able to successfully pull off what should have been an incredibly difficult task? The fact that the individual’s identity and whereabouts are still unknown is bad enough, and yet, perhaps even more troubling is the fact that no explanation currently exists as to how he knew the code for the safe within the bureau de change.

Whether or not this suspect will be caught is, of course, important, but this story also provides us with a far more interesting revelation, that being the idea that many of our preconceptions regarding the security and, ultimately, legitimacy of neighborhood bureau de change locations are, perhaps, incorrect. Given the fact that the world of currency exchange has recently been rocked by allegations of counterfeit currency selling in the UK in a separate, unrelated incident, many individuals have begun to ask themselves whether or not their desire to exchange large sums of money for international travel or business at their local ex-change venue is, indeed, the right idea.

This is not to say, of course, that sweeping reform or oversight is needed, but rather that specific problems have emerged in recent months that do need to be addressed by those in a position to remedy them. In time, such direct action will help ensure that the future of cur-rency exchange is not fraught with underhanded, illegitimate dealings and accusations of illegal behavior.

More information about this specific act of theft is likely to be provided in upcoming weeks as police continue their search for the culprit in question.

Euro to Dollar conversion rate declining

As could probably expected given the tumultuous nature of international politics and, perhaps more importantly, the global economy, the fx markets have experienced quite a shakeup over this past month. Although many of us would probably enjoy seeing some degree of stabilisation in the near future, the unfortunate truth remains that many ongoing issues are slowly reaching their apex in coming months (think Brexit, for starters). But, before we continue on what may happen in the future, let’s take a moment to discuss recent shifts in Euro to Dollar conversion, as these actions provide us with a decent context to predict future swings.

Experts consider a recent dip in the noted University of Michigan confidence index to have sparked a brief rally in an otherwise gloomy Euro Dollar slide. While the USD has fallen slightly, the Euro has been given an opportunity to gather the forces needed to initiate a much needed rally. Unfortunately, a host of dismal economic data being recently reported out of the Eurozone has made it somewhat difficult for the Euro to gain traction. According to recent reports, a surprisingly painful contraction in the EU’s trade surplus earlier this year (weighing it at just about 2.6 billion Euros) has proven to be a serious impediment for the Euro Dollar. Combined with the fact that inflation is occurring at a much faster rate than previously thought, the EUR has little positive news to pin a rally on.

In fact, even a spate of negative news out of the US is not providing a true foundation for upward momentum within the EUR. Consumer price date in the United States is at a depressingly low level, which would, historically, provided a valuable ‘bump’ for the EUR – this time around, however, no surge occurred. Likewise, statements from the Fed regarding squeamish monetary policy have almost always paved the way for EUR gains…except now. Suffice to say, it seems larger issues may be on hand if the Euro Dollar cannot find a boost in these historically rich offerings out of the United States. That being said, it is also important to note that international news outside of the US / EU domestic economy can also affect currency prices, and this scenario is no exception to the rule. China has recently announced a higher than expected growth percentages and a substantial boost of exports, news which was received warmly in the US and helped yet again strengthen the USD against the EUR.

What with all of the tumult in the EU regarding a potential Brexit, it is, perhaps, more easy to understand why traditional indicators are not yielding traditional results. The implications of such an observation are, however, troubling in their own right. With a break from history and, thus, historical trends, comes a journey into proverbially ‘uncharted waters’. There is little that analysis can offer when proven indicators do not yield proven results. Of course, this situation could change at a minute’s notice, or perhaps when the US releases their next round of economic reports. Until then, however, it will be quite interesting to observe how the Euro dollar withstands a seemingly unending stream of bad news spilling out of the European press. Sentiment, of course, plays a huge role in both traditional stock exchanges and the fx markets alike. With that in mind, it seems quite reasonable to assume that low morale could easily attribute to low value. Experts advise investors to watch closely for tests of support in the 1.230/20 region, as a break here may signal larger losses in the near future.

Is there such a thing as a money tree?

Money is the key to the modern world. Our lives pretty much revolve around it or at least depends on it.

No, there is no money tree that is magical. The magical money tree is something that has been heard of all around the world. Even the prominent people of the world, at one point in their lives used this phrase. However, this phrase is completely false. This is because if it was true, we could not be having limited cash in circulations and central banks could be issuing limitless amounts of it

Giving limitless amounts of currency to the public is not a good practice. This is because according to the bank of England, who aims to ensure that the growth of money is according to its objectives of maintaining low as well as stable inflation.

If there was an endless amount of money, it would have little value for all. This is the true restriction on creation of money as policymakers are always on the lookout not to overproduce it. Producing money is not as easy as talking about it, but a very complex process that depends on skill and luck. Commercial banks create money through some activities like issuing loans to the public. Loans are often limited by government, and can destroy families and businesses easily.

A magical resources-producing tree does not exist and neither does magical money. There is not enough money and resources in existence to meet each and every need and expectation.

Investors who work tirelessly to make their ends meet, definitely do not trust politicians with the so-called tree. Therefore, the power over the supply and circulation of money is taken very seriously by the known major investors.

In 1997, the financial markets welcomed a move of monetary policy powers to be handed down from the politicians and the Treasury to the Monetary Policy Committee (MPC), which is a strong team of nine. These monetary policy powers were formed on the basis that the government was not trusted as being in charge of the interest rates as well as other monetary policy instruments. Therefore, the financial markets entrusted technocrats like Monetary Policy Committee with monetary policy powers. This led to independent banks with least borrowing costs from the government, which is clearly represented by on 10-year bonds.

Investors were very excited to see that they were no longer controlled by the government. The government was no longer the key monetary policymaker. An example is drawn from England where Ken Clarke is said to have ignored the advice of Eddie George on interest rates who was the governor of the bank of England. This ignorance was because he wanted to ensure that the economy was growing rapidly as the election was approaching.

Comparing the yields on US and UK government bonds within a 10 year period, maturity stood at 1.8 percentage, which points in the decade before the Bank of England became independent. Consequently, Martin Weale, who is a member of the MPC attributed the central bank’s independence as a foundation of credible policy making, which ensures that the public have faith that it is free of political interference.

This clearly shows that there is no money magic tree. This clearly shows that there is no money magic tree. This clearly shows that there is no money magic tree. Monetary policy makers make sure that the money that is in circulation is just enough so as to maintain the value of money.

Have banks ignored the lessons taught from the crash?

Many people tend to recall very well some of the terrifying events occurring on 15 September 2008, when Wall Street bankwent under bankruptcy. As these sad news broke out, the atmosphere was filled with panic. Many were restless and could hardly find ways to transfer their savings to safer banks.

This situation was very frustrating as people just sat looking at their screens like statues not knowing what to do next. Even if there were some opportunities to be explored, they could not act since they were paralyzed. Phone calls were coming from family members giving suggestions to get as much money as possible out of the banks. Now as they try to recall those days, they feel humiliated by their vulnerability.

Two years later, these people who were very terrified when the incident occurred, they spoke as if they were not shaken by the event. However, the families who phoned their loved ones said that they were experiencing a domino effect. What they were afraid of is that the going into bankruptcy at such a huge institution could halt the financial system. This means that it could have been impossible to withdraw their money, and credit flow seized. This financial crisis was close to causing total failure of the global financial system. If this situation had occurred, then the global trade would have stopped working within a short period.

After the crash and threats of 2008, there has been a lot ignorance among the members of the public the political mainstream. The financial field tried as much as possible to hide the reality from the media by portraying themselves as innocent and that the crash was caused by greed or by some fault amongst the respective bankers. Even after the affected banks declared the need for significant changes in structure, people had doubts and questions about the reality of the crash.

Investigations began into the matter as well as reconstructions by writers, journalists and politicians. Many books have been published on this crash with extensive hearings and recommendations. However, they have not been given much attention by the public as they totally ignored the tragic event.

You can now change unwanted foreign money into pounds by using this clever machine

Let’s face it – one of the most frustrating elements of international travel is the vast assortment of foreign coins and bills that find their way into our bags, wallets, and purses when we return. Given the lofty commission rates and exchange fees that are often found in both high street banks and local exchanges, many individuals simply do not attempt to convert this money back into local currency, effectively rendering it useless. The times are changing, however.

Recently, a series of new kiosks are being installed throughout London which will allow users to convert a variety of foreign currencies into dollars, pounds or euros. Given the fact that these three currencies are considered staples within the money exchange industry, these kiosks allow for simple, no-hassle transactions for those seeking some of the more common exchanges.

When asked to describe the reasons why these kiosks were originally developed, co-founder Jeff Paterson explained, “The idea was born out of frustration…I had a whole lot of money lying in a drawer that I could do nothing with as the value of exchanging it outweighed the value of the money.”

Although it seems as if the need for a kiosk such as this has been around for as long as anyone can remember, the actual development of this machine is ground-breaking. The new kiosks will, literally, be the first of their kind.

The company behind the development of the kiosks, Fourex, has received valuable support and publicity from a number of high-profile organisations, one of the most noteworthy being Virgin Media. In fact, Fourex recently won Virgin Media’s acclaimed “Pitch to the Rich” competition using this kiosk.

In the upcoming months, kiosks will be installed in various tube stations, beginning with King’s Cross and Blackfriars. Fourex’s plans on have at least 400 kiosks in London by the end of 2017. Although the process of installing and fine tuning these money exchange machines will likely take some time, the fact that Fourex has remained focused on their singular goal is proof enough that this operation will be a resounding success. Although some customers and foreign exchange experts remain curious as to exactly what rates these machines will offer, most are in agreement that they will likely be far more affordable than more traditional money exchange businesses. Believe it or not, the world of money exchange is about to become significantly more convenient.

Category: Money Exchange