CURRENCY WATCH – FEBRUARY 2012
Robin Haynes, MD of Award-winning Currency Index looks back at exchange rates in January 2012 and the headlines likely to be affecting rates in February for buyers of overseas property.
For buyers of property in the Eurozone, the ongoing sovereign debt crisis has provided the best exchange rates since October 2010, with the Euro exchange rate improving 0.85% in January after a strong improvement towards the end of 2011. The only currency rate to gain more than the Euro was the US Dollar, where rates improved 1.72% in January.
Elsewhere the underlying weakness of sterling was evident, as the Pound lost ground in January against the New Zealand Dollar (4.44%), South African Rand (1.89%) and Australian Dollar (2.18%). Investors have been switching funds to these currencies during uncertain times, increasing demand and therefore reducing the exchange rate – not great news for people emigrating further afield.
With UK economic growth falling back into negative territory, an impending recession is unlikely to help the Pound’s cause in the coming months either.
The Currency Index Volatility Measure also shows that the Rand and New Zealand dollars were the most volatile currencies in January, with swings from high to low of 5.05% and 4.69% respectively. The Euro and US Dollar were also volatile (2.2% and 3.31%), showing that volatile conditions in financial markets have given property buyers more to think about when buying their currency. Contacting a reputable currency company will help individuals buying abroad to understand these movements and buy at preferential rates.
| January 2012 | Change | Volatility | |
| US Dollar | USD | +1.72% | 3.31% |
| Euro | EUR | +0.85% | 2.20% |
| Thai Bhat | THB | +0.50% | 2.215% |
| Candian Dollar | CAD | -0.13% | 2.24% |
| Swiss Franc | CHF | -0.54% | 3.06% |
| South African Rand | ZAR | -1.89% | 5.05% |
| Australian Dollar | AUD | -2.18% | 3.23% |
| New Zealand | NZD | -4.44% | 4.69% |
Overseas property buyers should be aware of key events coming up in February which are likely to affect exchange rates and therefore their overseas property prices:
• Ongoing: Greek debt negotiations & agreement of bailout
• Friday 3rd: Eurozone retail sales & US unemployment
• Thursday 9th: Bank of England Quantitative Easing decision & UK trade balance
• Friday 10th: US trade balance
• Tuesday 14th: UK inflation & US retail sales
• Wednesday 15th: UK unemployment & Eurozone GDP
• Friday 17th: UK retail sales
• Wednesday 22nd: Bank of England minutes
• Friday 24th: UK GDP
• Wednesday 29th: Eurozone inflation
Applying the exchange rate change to recent changes in local property markets around the world reveals the real change in cost to British buyers of property around the world.
| Currency | Property | Overall Change | Price | ||
| Portugal | EUR | -0.85% | -2.88% | -3.73% | |
| USA | USD | -1.72% | -1.61% | -3.33% | |
| Spain | EUR | -0.85% | -2.15% | -2.18% | |
| Greece | EUR | -0.85% | -0.89% | -0.89% | |
| Thailand | THB | -0.50% | -0.50% | -0.50% | |
| France | EUR | -0.85% | 0.24% | 0.24% | |
| Australia | AUD | 2.18% | 1.02% | 1.02% | |
| Switzerland | CHF | 0.54% | 1.93% | 1.93% | |
| New Zealand | NZD | 4.44% | 2.60% | 2.60% | |
| Canada | CAD | 0.13% | 3.59% | 3.59% | |
| South Africa | ZAR | 1.89% | 4.22% | 4.22% |
Applying the exchange rate change to recent changes in local property markets around the world reveals the real change in cost to British buyers of property around the world.
For example a British cash buyer can now pick up a bargain in Portugal for nearly 4% less than in recent months, or a saving of over £6,500 on a property which was on the market for €200,000 towards the end of 2011. The countries where emigrating or buying overseas are becoming significantly more expensive, are New Zealand, Canada and South Africa, due to an appreciating currency value and/or significant local increase in property prices.
For more information on currency exchange please contact the experts at Currency Index on 0800 043 2623 or visit www.currencyindex.co.uk.
*Based on data from Global Property Guide 2011