Hello from Premier FX E News - 20th February

Hello from Premier FX E News Another fairly volatile week in the currency markets no doubt awaits us. Last week STG/EUR was not a great mover, but STG/USD recovered from previous weakness around 1.56 to 1.58. This volatility will no doubt continue, and this currency pair in particular, could well influence the next move in STG/EUR.    News from the UK last week showed that the economy is nowhere near out of trouble. The troubles in Europe will have negative influences overall on the UK economy. Although it looks like a return to a full recession will be unlikely,  it seems that there will be quite a lot of anxiety over the domestic economy for some time yet STG/EUR needs to hold above 1.20 this week to regain some of the confidence it has lost in the past week or so. To us, anything above 1.20 is good value and in all honesty fair value at the moment is probably nearer 1.18. Therefore, as always, anything between 1.20 and 1.21 is good to buy. Short term we may not move up much more and a move below 1.20 will signal the down move to 1.18-so beware. STG/USD is the one to watch away from STG/EUR that could well gyrate between 1.57 and 1.60, again the higher end being good value. Have a good week    Key factors:   *  Anticipated range this week STG/EUR  1.18-1.22 * STG/USD the driver    * UK house prices remain stable  * Central bank says uk economy will zig zag     Have a good week! The Premier FX team

Premier FX is also fully authorised by the FSA as a payment services institution no 530712

The Premier FX Team

 

 

 

FEBRUARY 2012

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Current Affairs

Peter Rexstrew, managing director of Premier FX, looks at how international events influence the currency exchange market.

"You may have bought a second home overseas, or even moved permanently, to try to escape the rat race. But as nice as it is to think of places like the Algarve as a little bit of a cocoon, there is sometimes no respite from outside influences.

If anybody says that the global economic crisis hasn't affected them in at least some measure, they're lying. Or deluded. It hasn't been dubbed 'global' without reason. And bad news on the wider political front, such as unrest in the Middle East, or closer to home, like the recent economic problems that have hit Ireland, Greece, the UK and of course Portugal, continues to affect international exchange rates. So if you have a currency exposure - either personally or on the business front – it's important to be aware of movements that may cost you money.

Overseas holiday homeowners and expatriates in particular are permanently at the beck and call of exchange rates, whether it involves a property purchase, regular payments such as mortgages, rental fees or maintenance charges, or simply ongoing living expenses.

So how do you guard against fluctuating exchange rates? High street banks can of course implement your currency transactions for you. However, they are not specialists in this field of finance, which means that the rates they offer are not that competitive. And they will charge you to transfer funds abroad.

By using a specialist currency company however, you can save far more money on your transactions - at times up to 4 or 5 per cent. The method is simple and quick, and as all currency brokers operating on behalf of British clients are regulated by the UK's Financial Services Authority and HM Customs and Excise, you know your money is in safe hands.

Options

The more money you exchange of course, the greater the importance of securing competitive rates. If you are in the process of buying your home in the sun for instance, there are substantial savings to be made, especially as it is possible to fix rates for a given term so that you are protected against wild exchange rate fluctuations. This is called buying forward. It gives you peace of mind, and can help a great deal when you are budgeting. So it's worth talking to a currency exchange specialist who can make you aware of the options available to you, both when buying the property and with regard to regular future payments.

The ongoing economic uncertainty in Europe will continue to impact on the pound. The UK, although not in the euro, is in the European Union, and sterling as a currency is still vulnerable on the foreign exchange markets. And if the uncertainty in the UK economy itself continues, then we could see further weakness in the currency as the year progresses: we may even be heading for sterling-euro parity towards the year-end.

Even more reason why currency planning should be an essential part of your financial dealings."

SEPTEMBER 2011

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Currency specialist opens doors

Leading Algarve-based currency exchange specialists Premier FX held a recent open evening in Almancil, giving clients, introducers and business partners the chance to see their newly-extended offices.

Premier FX managing director Peter Rexstrew and his team welcomed over 80 guests from the Algarve business and residential communities, with superb food and wine supplied by chef Jonnie Pratt from nearby Bistro des Z'Artes.

The new-look Premier FX offices now include a meeting and business suite in addition to the trading room – the nerve centre of the company's operations and the only one of its kind in the Algarve, monitoring exchange rates across the world on 'live-time' feeds and equipped with a plasma-screen TV permanently tuned in to a combination of CNN, Bloomberg and BBC News 24 to keep up with worldwide financial and political news as it happens.

"We don't blind people with science," says Peter Rexstrew. "There is no great mystery to dealing in currency exchange, but it can sometimes seem complicated to the outsider, especially if they haven't had a great deal of exposure to the international financial markets. We take people through it step-by-step, and ensure that each client has their own account manager who is available to talk to them at anytime.

"We can also reassure clients with the fact that we have been operating in the Algarve market for several years, are fully regulated by the UK's Financial Services Authority and HM Customs & Excise, and hold segregated accounts with Barclays Bank in London for each client."

JUNE 2011

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The Long Run

Peter Rexstrew, managing director of Premier FX, explains why forward planning is more important than fluctuating exchange rates.

"The majority of people who are considering buying a property abroad are usually doing so as a holiday home, an investment, or a lifestyle change that may lead them to living overseas at a future date. One thing UK residents in particular look at when considering their purchase therefore is the level of the sterling-euro exchange rate. It's an important factor, and could have a big influence on the final decision.

Despite the economic crisis, overseas property still remains at the forefront of many people's minds. Affordability is, more than ever, extremely important, and of course we would all love to see a return to high exchange rates to help ease the purchase process.

However, there are possibly more important factors that can influence the decision. And one of those is interest rates. If they are low, and it is easy to borrow the funds, then the purchase can become easier via a mortgage. This almost takes any exchange rate risk and fluctuations out of the equation, as the mortgage will more than likely be in the local currency. In recent years, mortgage rates have been low, and although the lending criteria from the banks has become more severe, finance for property has still been forthcoming. What the majority of buyers who have taken finance then do is budget accordingly, and fix the exchange rate to pay the mortgage for up to two years.

But what about the sellers?

With sterling lower than it has been for a while, a property seller can actually reduce their price to suit current market conditions, and yet still realise more sterling than they may have paid to buy the property in the first place.

Take an example. Mr Smith bought a property five years ago for €I million (euro), when the exchange rate was 1.48 - in other words £675,675.67 (sterling). Five years later he decides to sell in a difficult market, and although the property valuation is closer to the purchase price, he can still take advantage of the lower exchange rate. He receives an offer of €800,000 (euro).

Although it seems that his property has depreciated, with an exchange rate of 1.12, he therefore receives £714,285.71 (sterling) - more than he originally paid. The house is sold and he walks away with more sterling. The buyer is also happy, as he has bought his house at a very good price.

All of which means that, for many, the property market in Portugal is still a good one to be in. Overall, property in Portugal still represents a good investment, even if the market, as elsewhere, is slow. Compared to world events in the economic and political sphere, the level of the exchange rate itself will not have a massive influence on the market, especially if finance is still available. More and more people are now getting used to exchange rate levels between 1.10 and 1.20, so will factor this in when considering a purchase.

There is no doubt that the world economic turmoil is far from over. Affordability will remain the key to the property market for some time. Once confidence returns then we may see a pick-up, but these purchases will not really be exchange rate-driven. It helps - but it is not as important or influential as it was. What is more important is the cost of living in the country in which they are considering buying, compared to where they currently live. They may then use the exchange rate to work out the costs of everyday goods and services.

Sterling seems likely to be set in a range between 1.10 and 1.20 for the foreseeable future, and whilst - given the volatility of world affairs - nobody can guarantee that, it may well help you budget accordingly to buy your dream home."

MAY 2011

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The Big Picture

Peter Rexstrew of Premier FX looks at how global political and economic factors affect the exchange rate.

"Overseas holiday homeowners and permanent residents of foreign countries often feel they are at the beck and call of the exchange rate. And the questions they ask are often the same. What moves the rate to extreme volatility? Why is it different every time we look at it? How can we protect our long-term assets or plan ahead?

The global economic downturn has certainly had a major adverse impact on exchange rates, and compared to two or three years ago, you will be getting far fewer euros for your sterling. So if you receive a pension from the UK or have to pay an overseas mortgage or condominium fees, then it's best to protect yourself from exchange rate fluctuations as much as possible.

The foreign exchange market, being one of the most developed in the financial world, has a daily turnover of billions in all currencies. Volatility is mainly caused by events happening in the country of that currency, and comes back to simple supply and demand. It figures that if there are more sellers in the market than buyers, then the currency will go down. Likewise, it will go up if there are more buyers than sellers.

However, other events that happen in the world also contribute to movement and volatility. For example, the current political instability in the Middle East has an impact on oil production, which is paid for in US dollars, so this could have an effect on the demand for that currency. Other factors such as interest rate movements (as predicted soon in the UK for instance) will also influence the demand for currency.

Charge

So how do you guard against exchange rates? High Street banks can of course handle your currency trading for you. However, they are not specialists in this field of finance, their rates are not that competitive, and they charge you to send the funds abroad. By using a specialist currency broker however, you can save far more money on your transactions, at times up to 4 or 5 per cent.

A good example of this is a British person buying a property abroad for 200,000 euros. The bank will offer them a rate of 1.1700, which means they have to part with £170,940.

The rate from a currency broker is always far nearer the market rate however, and in this case the rate they would give the client is 1.19, meaning the sterling required would be £168,067.

That means a saving of £2873 for the client: a big difference. And that's not including the fee that will be charged by the bank to send the currency.

The same principle applies to people who have to make small regular payments, taking money out of a sterling account in the UK and transferring it into euros. It is possible however to fix rates for a given term so that you are protected against wild exchange rate fluctuations.

Which is why it makes sense to talk to a specialist currency broker. All of these types of firms hold segregated client accounts with UK high street banks, ensuring your money is safe, and have to be regulated by the FSA and HMRC customs and excise.

Sterling as a currency is still vulnerable on the foreign exchange markets and if the uncertainty in the UK economy continues, then we could see further weakness in the currency. On a positive note we may again see it above 1.20 but this could only be for a short while. There are volatile times ahead in 2011 – so perhaps now is the time to start planning ahead currency-wise."

MAY 2011

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Plugging the hole

Peter Rexstrew, managing director of currency exchange specialists Premier FX, looks at how you can save money on your regular transactions.

"In these straitened times, everybody is looking at ways to cut down on their living costs without it having too much of an effect on their lifestyle. This applies especially to those who live on a fixed income, particularly one that is based on, say, a monthly pension, and involves them drawing euros out of a UK account to pay for their day-to-day living costs here in Portugal.

With almost all banks and building societies now charging a fee not only for bank transfers but also for the 'privilege' of withdrawing euros out of an ATM (or a hole-in-wall machine as they are commonly known), the costs can soon mount up.

The solution? Exchange sterling to euros via a currency specialist. Not only will you get a far better rate of exchange, given the volume that currency specialists trade at, but you won't be charged any commission.

The sums really do add up. Take this for an example:

Let's say you make a regular monthly transfer of £2000 sterling from your UK bank into euros, either directly via your bank or courtesy of an ATM. The current exchange rate the bank will give you is 1.12. Add on a £25 transfer fee, and the amount you will receive in euros is 2,212.

Make the same transaction with Premier FX and we will offer you an exchange rate of 1.17. With no fees payable by you, the amount you will receive in euros is 2,340.

That's a monthly saving of €128 and a saving over the course of the year of €1,536. Just think what that will buy you?

Another way to save is by forward contracts, where a rate can be agreed at a set price but not paid for until a later date. The euro-sterling rate is pretty good at the moment, and now could be a good time to look at forward contracts, especially if you have a sizeable currency exchange requirement planned for the foreseeable future – perhaps for a property purchase. The benefit of a forward contract is that the rate stays the same whatever the market volatility during the period, and it's a good way to plan your currency strategy if you're in the position to do so.

Nothing is certain in the world of finance and politics, but it does look as though exchange rates will continue to be volatile in 2011. The pound could fall victim to the budget cuts in the UK, especially if they prevent growth.

So it's worth doing some forward thinking of your own."

FEBRUARY 2011

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