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.

Is the Foreign exchange market shrinking?

It took the foreign exchange market decades of build up as well as globalization and deregulation measures to earn the title of the largest financial market there is. However, as much as the forex market cannot get relinquished easily, it appears as if its glory days may just be over.

The situation has been accredited to the shrinking in size of both the market volumes as well the number of employees who work in the currency departments of most major banks. Other factors contributing to the same fact include banks implementing stringent regulations, a downward trend in; the market boom, as well as global economy and growth.

According to statistics, in the last three years, the total number of market traders employed in Europe’s top ten currency exchange banks has dipped by 30 per cent. Based on figures provided by the New York Federal Reserve and the Bank of England, as of last month, the trading volumes have reduced to a three-year low.

According to Coalition; a financial data analytics firm, 332 people were employed by the top ten FX banks that operate in Europe. However, in 2012, 475 people were employed by the same institutions, meaning that in 2012 the number of individuals employed by the banks was 30% higher than in 2015.

According to a central banker, towards the end of the year in 2014, the global forex activity in the market was at a peak. During this period, the average daily volumes amounted to about $6 trillion a day. According to data provided by CLS Bank, the average daily volumes in January amounted to $4.8 trillion. This figure indicates a drop by 9% from the previous year and a far cry from the peak average of $6 trillion.

The downward trend has also been attributed to regulatory changes that took place after the global financial crisis which has resulted in a reduction in the ability and willingness of traders to take risks.

According to Howard Tai, a senior analyst at Aite Group, the regulations carried a psychological effect on the market players and thus traders are o longer as aggressive as they used to be.

Suppressed market volatility has also been blamed for the dwindling average market volumes. A fall in spot volumes and reduced demand for derivative products; for example, currency options, based on the fact that if there is no movement of money in the market, them the demand for hedge quite minimal.

According to the managing director of Chapdelain FX, Douglas Borthwick, there is little volatility due to zero interest rates combined with a global environment that appears to be very dovish. Thus, since the volatility is low then the total average volumes are also low.

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.

British Currency Taking a Hit

Those who make a point of following currency exchangexchange-related news will likely not need to be told that the British Pound has not fared well in recent times. In fact, it’s fair to say that little good news can be found related to the performance of the Pound recently. A series of repetitive, volatile swings in pricing earlier in the month have left investors somewhat rattled. The Pound has consistently performed poorly against the dollar recently, mainly due to strong economic indicators in the US and continued instability throughout the European Union and the United Kingdom at large.

That being said, it is also important to note that the British pound has been unable to hold value against the EU dollar as well. Earlier in April, the pound was unable to shake investor worry and continued to slip well below expectations. This continued poor performance resulted in a chain reaction of slides against global currencies, including the Hong Kong Dollar and the NZ Dollar. The pound also performed poorly against the Australian Dollar.

Although the month began in a rather turbulent fashion, recent news is far more encouraging. Many analysts are now confident that the downward trajectory of the British Pound has been all but abated. Also, it is important to note that dubious signals related to the strength of the US domestic economy have caused the American Dollar to slide relative to the pound. Neither nation, it seems, has much to be thankful for when it comes to long-term optimism. However, it will be quite interesting to observe precisely how the looming threat of Brexit continues to influence the value of the Pound. After last year’s rather mundane period of sedentary activity, recent global politics have once again swung FX markets into action and ensured that traders are on they toes. For those who are considering whether or not now is, indeed, the time to reconsider investment in the Pound, a growing number of experts are adopting buy positions on the currency. The outcomes of big bets on the currency exchange will likely be revealed in the upcoming weeks as the currency moves towards stability.

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.

Major bank set money aside to refund customers for wrong foreign exchange payments

If there wasn’t enough grief already in the world of foreign exchange, the latest news emerging from Barclays is likely to cause a new round of complaining and frustration amongst British travellers. According to a recent report, an internal probe within Barclays discovered that the company had been exchanging currency for their customers at incorrect rates between the years of 2005 and 2012. Essentially, customers who had visited the bank during this period in order to exchange domestic funds for various international currencies were likely given less money in return than they had rightfully deserved. Now that the probe has unearthed this controversial information, Barclays has announced that they are setting aside nearly 290 million pounds sterling in order to ensure that they can properly compensate all of those who may have been “short-changed” by this oversight.

It seems as if stories such as this are abundant throughout the foreign exchange industry. Over the past several years, a number of high-profile controversies have occurred regarding the rigging of the wildly frenetic foreign exchange markets and bureau de change locations. In many of these scenarios, banks found guilty of illegal actions in the fx markets are now being sued by their former customers.

It is also important to note that this is not the first substantial monetary loss that Barclays has incurred this year. In May, Barclays was forced to pay a 1.53 billion pound fine due to accusations of fx market fixing. In another recent incident, it was discovered that Barclays employees were verbally offering customers less than optimal exchange rates on foreign currency and then keeping the difference between their stated rate and the actual exchange rate at the time.

According to David Buik, a broker with Panmure Gordon, the fact that Barclays has taken the initiative and announced this new compensation package for their clients is an attempt to minimize the fallout from the situation at large. Transparency has also been an issue in the fx markets, and yet, in recent years, it seems as if bureau de change locations and other foreign exchange services have developed a particular dubious reputation. It will be very interesting to observe what, if any changes will be made in both the short and near future to ensure that these types of problems are properly dealt with before they become a public grievance. If banks such as Barclays are to preserve their relationship with the general public, scandals such as this must come to an end as soon as possible.

Category: Money transfer