Speculating on the US$

Lovin_It

Jonbvn wrote: »

I am confident that sterling will drop, but not when and by how much! Remember when the US sneezes..... Also we may be in for a correction in house prices similar to the US. Overall, a comparison between the UK and US economies, indicates that sterling is presently overvalued.

BTW, I do not have the pockets (or the b#lls) to consider spread-betting.

We are headed for very interesting times with the global economy imo, Jon. I'm not sure the of coefficient for each factor (maybe house prices are significant, but I hadn't considered this) but our trade imbalance isn't as bad as the US and our interest rates are much higher (typically two heavy determinants of exchange rates). Even the Yen is strengthening against the USD (Yen interest rates are 0.5% from memory). If the OPEC countries lose their appetite for firstly selling their barrels of oil denominated in USD (as opposed to Euros, say) and / or they no longer wish to purchase Fed paper (i.e. loaning the Fed their surplus money each month, in an increasing spiral) the dollar could well slip further. There is already a move for soveriegn wealth funds to invest in companies rather than government bonds (e.g. Sainsburys with Dubai).


I'm personally very bullish on Africa - I purchased shares in Nigeria recently, but you probably won't take me seriously now...

ashm1

Lovin_It wrote: »

Spread betting is the easiest way to take a position on currency fluctuations - e.g. cityindex.co.uk

I wouldn't be so confident that it will drop though! With their trade imbalance, and the amount of paper the fed has been issuing, the likelihood is they'll print a whole lot more dollars in the future (making the pound stronger).

Caveat emptor, of course.

lol they stopped publishing M3

Jonbvn

Lovin_It wrote: »

I'm personally very bullish on Africa - I purchased shares in Nigeria recently, but you probably won't take me seriously now...

I do take you seriously. I have worked in Nigeria in the oil industry! With the increase in the price of oil together with some degree of democracy (however corrupt), they have gone from being a pariah state to an African leader. Some of their banks seem to be doing very well.

Lovin_It

Jon - yes, I bought shares in First Bank about a month ago, which have gone up 83% so far. I don't pretend this is sustainable, but with a diversified portfolio, the NSE is worth investing in, imo.

Access Bank are issuing more shares this month, plus anything run by Dangote seems to do well (Dangote Flour IPOing shortly).

I always saw Nigeria as a currency risk, but the rate has hardly changed in a year (I guess because of their oil exports and more consistent government, as you said).

The biggest benefit is that their economy is uncorrelated with any others, it seems, so if US and UK hit judgement day with all the credit flying around, Nigeria will still be sailing its own course.

Have you any investments left there?