When to convert my currency to JPY

Mveasey1614

Hi! I am planning a trip to Japan for fall 2020, and obviously this will be after the Summer Olympics takes place.

Will this event, and the possible surge in tourism, affect the rate of the Japanese Yen?

I will be converting GBP to JPY and wondered if you think it would be better to convert my money before any change occurs, or after, or if it is unlikely to make a difference.

Thank you in advance :beer:

Voyager2002

The best time to buy foreign currency is before the Brexit referendum.

Mveasey1614

So, I am guessing that, if we don't get a deal, our currency becomes less stable, drops in value and therefore can't get me as much JPY in return? And if the Olympics increases revenue into the Japanese economy, the JPY may strengthen, meaning it will take even more of my GBP to get the amount I wanted to take in JPY, compared to now?

I'm not the most informed on this subject, so I know it probably seems obvious, but am I right?

Mveasey1614

Also, if there is no second referendum, and Britain manages to agree to a deal, could that not raise the value of the GBP, compared to now when the future of the country is uncertain? Meaning it wod be best to wait for a deal?

eDicky

V2002 may have been referring to the past referendum.

In exchange rate movements nothing is obvious, nothing is certain, except that they are unpredictable. The likelihood or uncertainty of future events are already reflected in today's currency values, it is unexpected events (such as the Brexit vote) that will affect them in future.

Therefore it's pointless trying to figure out the future of the GBP-JPY exchange rate, unless you are a gambler or destined to be a successful Forex trader.

If you want to reduce the effect of major fluctuations on your money for a trip in over a year's time, when so many unpredictable events could happen meanwhile, you could 'hedge' by periodically exchanging portions of your funds. But unless you have a way of exchanging at or very near to the mid-market rate, the margins you'll be paying will reduce any benefits.

Most of us don't bother indulging in speculation and just obtain the best available rates at the time of travel, such as by using cards recommended for the purpose in the MSE articles.

Voyager2002

Mveasey1614 wrote: »

Also, if there is no second referendum, and Britain manages to agree to a deal, could that not raise the value of the GBP, compared to now when the future of the country is uncertain? Meaning it wod be best to wait for a deal?

I agree with your analysis, with the very important addition that known future events are "priced in". So, for example, it might be that the Olympics will greatly increase the number of people seeking to buy yen in order to pay for hotels there, so one would expect the value of the yen to increase. Traders know this, so as soon as they are confident that this is what is going to happen the value of the yen will increase. So exchange rates respond dramatically to surprise news.

So: if Britain agrees to a deal then that ought to increase the value of sterling, unless the traders are already confident that there will be a deal in which case it will not make much difference. And the present situation: the prospect of a no-deal (which is generally seen as being bad for the pound in the short term) combined with political uncertainty, would seem to be just about as bad as it possibly could be, so I am baffled that the pound is as high as it is.