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.

Five EU Nations Are Starting to Work Together

The Panama Papers have proven to be a significant source of controversy in the European union. Given the relatively worrisome state of the EU economy, it should come as no surprise that members of the general public are outraged when information regarding tax havens, currency exchange, and secret accounts amongst members of the political class is leaked. In response to this anger, representatives from the UK, Germany, France, Italy and Spain have recently announced that they will be launching a collaborative effort to crack down on the growth of secretive financial dealings amongst affluent business leaders and politicians. This five-nation coalition has initiated a new data sharing initiative which, it is hoped, will ensure that business owners are held accountable for the appropriate amount of taxes they should be required to pay by law.

The implications of this collaboration are quite significant. Most importantly, it sets a new precedent by which these five nations are hoping to encourage the remaining members of the G20 to adopt similar disclosure methods. As a point of reference, it is important to note that G20 members such as the United States, Saudi Arabia and China do not currently allow for the disclosure of citizens’s tax information. This has made accountability a particularly elusive measure, and has helped to stoke tensions between nations seeking to increase their tax revenue by cracking down on corruption and illicit dealings.

In a statement regarding the induction of these new policies, British Chancellor George Osborne proclaimed, “Today we deal another hammer blow against those who hide their illegal tax evasion in the dark corners of the financial system…Britain will work with our major European partners to find out who really owns the secretive shell companies and trusts that have been used as conduits for evading tax, laundering money and benefitting from corruption.”

Although the UK and its four partner nations are, obviously, taking these measures quite seriously, many experts remain skeptical that these measures will produce long-lasting, substantial reform in either tax or currency exchange issues. International coalitions operate at peak efficiency when a large number of partner nations agree to collaborate. At the moment, the reach of these new policies remains quite narrow. With that in mind, tax evasion will likely continue to remain a serious problems for the foreseeable future. It is the hope of Osborne and others, however, that these new policies will provide a symbolic and tangible victory for government regulators.

Euros to Pounds plummeting, is it worth converting cash now?

The possibility of Brexit, no matter how dim or vague, has, for all intents and purposes, created concrete and dramatic fluctuations in the UK economy to date. Although the likelihood of the Brexit movement succeeding has become less plausible in recent months, the turmoil created by this vote has sent shockwaves through the global currency markets, particularly with respect to the British Pound’s relationship to the Euro dollar.

According to recent data culled from the fx markets, the Pound is performing quite poorly against the Euro. With this in mind, a growing number of British residents are flocking to currency exchange centers in order to exchange their Pounds for Euro Dollars prior to summer vacations and other holiday outings in order to ensure that they can maintain their purchasing power in the event of further declines in their domestic currency. According to statistics released by the Post Office, the central source of currency exchange in the UK, there has been a 43% increase in the sale of Euros at this time compared to this point last year. The continued fear of economic and political turmoil has sent Pound / Euro exchange to nearly double their normal frequency at multiple points in the past few months.

Unfortunately, these fears are not without their real-world manifestations. Recently, the Pound fell to a record low against the US dollar, dipping to exchange rates which had not been seen since the height of the global financial crisis in 2009. Additionally, the Pound appears to have fallen up to 9% against the Euro Dollar, leading some experts to believe that a more staggering collapse of the Pound could be imminent as the Brexit vote nears. Adding fuel to the fire, HSBC has recently announced that their analysts have predicted that the value of the Pound may fall up to 20% more if the UK were, indeed, to leave the EU behind. Such pricing fluctuations would have staggering consequences in the UK, with import and export activities being severely disrupted.

In a prepared statement regarding the issue of GBP volatility, Justin Urquhart-Stewart, a representative of noted investing firm 7 Investment Management, stated, “Sterling is going to be as soggy as the British weather, and until the EU referendum is out of the way, the uncertainty is going to get worse.….You never know which way currency is going to go, but if you have a holiday booked I would get at least half of your currency now; maybe even more. I cannot see why the pound will get any stronger.”

There is, of course, no method by which the fine details of the fx markets can be accurately predicted for the upcoming months. Suffice to say, however, that there is a growing consensus that the Pound will, for better or worse, face turbulent waters for the rest of this year. Because of this, many financial advisors are recommending that those individuals seeking to enjoy a European or international holiday abroad this summer would do well to begin withdrawing the cash they plan on using during their travels now. According to David Black, the founder of noted financial analysis firm DJB Research, “If you know you are definitely going away this summer and you have the cash to spare, then it might be an idea to work out how much spending money you will need and get half now”.

More information regarding the fate of the Pound will likely reveal itself in the upcoming months. Until then, those individuals who do plan on using their finances for international activities are advised to keep a watchful eye on the fx rates as they fluctuate. Although a rally in the Pound has been predicted in the event of a “stay” vote during Brexit, it is far too early to determine whether or not this will, indeed, occur.

Hackers stolen £651 million from banks

For years, financial institutions around the world have relied upon the Swift payment system for international transactions with partner organisations, individuals, businesses etc. In a way, Swift has proven itself to be a highly efficient, ultra-reliable tool by which the world’s financial infrastructure can operate. Recently, however, a group of as yet unidentified hackers have proven that even a system as secure and heavily defended as Swift can be manipulated in order to help perpetrate cybercrime and digital theft.

According to official reports by global security experts, a team of hackers recently targeted the Bangladesh central bank as part of a massive cyber theft attack involving international money transfer. As a result of the attack, nearly 55 million pounds Sterling were diverted into the hands of these culprits. Although experts now know that the money was transferred to the Philippines, little information has been made available regarding who may have been behind this perfectly executed heist.

This crime has underscore the need for fresh thinking when it comes to designing and properly implementing theft deterrent measures within the Swift network. As it currently stands, there are nearly 11,000 banks and financial institutions which utilise the Swift payment network on a regular basis. In a recent response to the theft, representatives from Swift have stated that the company has known of “…a number of recent cyber incidents in which malicious insiders or external attackers have managed to submit Swift messages from financial institutions’ back offices”.

It is perhaps, reassuring to know that the means by which these criminals were able to manipulate the Swift system was through external means, i.e. the banking infrastructure itself as opposed to the Swift transfer mechanisms. In this heist, for example, Swift merely operated as a means by which the funds were transferred as opposed to the method by which hackers gained access to the funds.

Methods aside, however, this incident serves as a stark reminder that money transfer remains a potentially dangerous and risky tools for businesses and individuals alike. Although the Swift system may not have been directly involved in the heist, it remains the primary vehicle by which one of the world’s larger thefts was successfully completed. More information regarding this shocking crime will likely be made available in the near future. Investigators are actively searching for further information regarding this crime and the identification of possible suspects.

Category: Money Exchange