Expat Exchange Rates – May 2015

Expats need to keep an eye on foreign currency exchange rates to make sure they are getting value for money.

Forex rates can be so volatile in the short-term, it’s easy to think you should have asked for a rise or left that cash in another currency rather than switching to one that’s on a slide.

But the problem with micro-managing money is it’s too easy to get caught out taking a short rather than a long term view of the money markets.

The world economy is in a constant state of flux and you can only make a decision on the day depending on the information that’s available.

The current currency winners and losers are most from those who lost the most over recent months.

Markets correcting

Russia’s ruble (+12%), The Ukraine hryvnia (+4%) and Brazilian rial (+4%) have all gained against the euro in the past few weeks after taking heavy losses.

Perhaps the biggest lesson for expats here is markets tend to auto-correct after an extended period of gains or losses.

Playing a waiting game tends to win over changing strategies every few minutes.

The Turkish lira now has a place at the head of the top table as the worst performing emerging market currency. The lira has lost 4% as the nation’s economy has hit the skids and is on a downward track.

For expats living off the beaten track in countries where the call for local currency is small, Tanzania stands out like a sore thumb.

Too much success

The problem for the government is too much success. Investment is flowing in and the government and business need imports and to spend on infrastructure to keep growing.

However, the sellers of that equipment and expertise want paying in US dollars the country just doesn’t have sitting around.

That pressurises the local currency and pushes down the value against the dollar.

   
Central Bank Rates
CountryCurrencyInterest rate
JapanJPY0.10%
SwitzerlandCHF0.00%
European Central BankEUR0.05%
USAUSD0.25%
CanadaCAD 0.75%
AustraliaAUD2.25%
New ZealandNZD3.50%
United KingdomGBP0.50%
Currency Rates
CurrencyRate
EUR / USD1.13512
USD / JPY119.386
GBP / USD1.52532
USD / CHF0.9152
USD / CAD1.20366
EUR / JPY135.517
AUD / USD0.79803
Source: XE.com

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