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Currency Exchange - Essay Example

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Author : xgoodwin
Finance & Accounting
Pages 9 (2259 words)


Currency Exchange Assignment Name: XXXXX Professor: XXXXX Institution: XXXXX Course: XXXXX Date: XXXXX Sterling/US dollar exchange rate over the last 5 years Since the collapse of the Bretton Woods system, exchange rates between currencies have been very unstable…

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Currency Exchange

Around 1967 the GBP was devalued by 14 per cent, a major economic policy decision. Since then, the Sterling, on average has either depreciated or appreciated by 14 per cent every two years. The figure below shows how the exchange rate between the Sterling and the United States dollar has performed over a 5 year period. Around the mid 2008 shows a sharp drop in the exchange rate from around 2.0 to a low of 1.4. The significant change in the movement is attributed to the financial recession of the 2008. Sterling/US dollar exchange rate over the last one year For the past one year, the Sterling has been weak against the USD making the USD an expensive and valuable asset. This means that the clients needing to buys the currency are paying more and more. The reason for this slide may be due to the steps forward by Europe and the US. For instance the situation in Italy may be the key factor for the change in exchange rates which could go on for the next couple of weeks. Also, with a further round of Quantitative Easing expected in the UK, the Sterling has been losing ground against the USD. Rates have dropped and whilst many expect this trend to continue should QE be confirmed, this in my view is being priced by the investors. ...
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