Exchange rate gambling: I win for a change!

· by Steve · Read in about 2 min · (389 Words)

One of the problems with doing most of your business internationally is that you’re at the mercy of currency exchange rates, with the ever-present possibility of losing money just because the market changed. In the last couple of years the Pound has steadily got stronger against the Dollar, meaning it’s not a case of whether I lose, but rather how much. It has also meant that for new work I either have to stick to my Pound rates and risk being less competitive, or just accept a lower & ever-depreciating Dollar rate in order to secure the work.

Over the last month though, things have suddenly changed. The UK housing market is in free-fall, and most recently the Chancellor gave a rather unexpectedly candid interview in which he basically admitted that the UK economy is up a certain creek without a certain paddling device. Nice of him to be honest about it, but the markets aren’t used to such lack of spin and reacted quite badly (being as they are twitchy, caffeine-overdosed sheep suffering from chronic panic attacks) - and promptly leaped off a metaphorical cliff, as did the exchange rate. Perhaps the Chancellor’s honesty is attributable to those eyebrows - I’m guessing they make bluffing considerably more difficult 😀

Lots of people are now lamenting on the news & talk panels about how this will affect the price of imports, but there’s never a shortage of people to go on these programs declaring that we’re all doomed and we might as well throw ourselves under the next passing bus. Personally I find it rather ridiculous because these are the same people that were lamenting when the rate went up in the first place, because it would cripple all the exporters in Britain (and we might as well throw ourselv….you get the idea).

Personally, I’m glad - the Pound/Dollar rate has finally returned to about what it was when I went into full-time business in 2006 ($1.77 ish), having dropped over 10% in a month. I wouldn’t mind if it dropped a bit lower - I was quite happy when it was about 1.6 personally. Sure I’ll pay more if I buy something from the States, but far more money comes in my direction from there than the other way around.

So, to the Chancellor: thank you, Darling! 😉