Last month's readers will have seen the trends I described in major
currencies - against the US dollar - continue unabated, and indeed the
euro is in fact trading over 1.0500 as I predicted it would. Now we are
at an extremely interesting point in currency rate trends!
There are various fundamental factors in play, as well as political
ones, that have a bearing on the value of your foreign exchange and, ultimately,
how many baht you will receive for your euro, dollar or franc.
Japan
This is year of changing faces, as Japan leads off with a change in
the governor of the Bank of Japan. The European Central Bank, Bank of England,
and US Federal Reserve are also due to 'change their heads' this year.
Japan is obsessed with controlling its deflationary spiral, and its government,
in the persons of trade minister Hiranuma, the finance ministry's Shiokawa
and Hayashi, and BOJ chief Hayami are openly trying to talk down the yen
- to no avail at the moment. A good analogy is that of standing in the
path of a speeding train, as the dollar/yen rate has just fallen below
118.00 and the Japanese currency gains strength for the time being. I see
it going a lot lower, myself, despite the rhetoric of massive government
intervention.
United States
The dollar, which is the world's foremost currency, is caught between
a rock and a hard place. As I write, the deadline given to Iraq and prospect
of a war on that country this month is not helping the greenback. Coupled
to that we have the weight of the US current account deficit, weaker than
expected employment figures and general investor uncertainty. I predict
that the expected rebound in dollar strength will not come as soon as many
forecast, and in fact be in the first leg of a multi-year 'correction'
against the European currencies, Australian, Canadian and New Zealand dollars.
The 'strong dollar policy' is as dead as a dodo.
Anthony Purkis of Strategic
Investment Advisers with wife Kanya and daughter Andessa, outside their
home in Chiangmai
Anthony Purkis has
lived in Asia since leaving the shores of 'old Blighty' with no regrets
in 1992. Strategic Investment Advisers now operates managed currency accounts
in the USA on behalf of offshore investors.
Anthony Purkis
was born and educated in the UK, after living for 7 years in Malaysia as
a young child Working since 1987 as a consultant, Anthony has run his own
firm in the UK and has worked for leading investor relations companies
and a major banking group. He has been an expatriate for 10 years and came
to live in Thailand with his Thai wife and 3 yearold daughter in March
2001, although his happy association with this country goes back to 1994.
After brief
experiences with expatriate investment consultancies in Thailand and Kuala
Lumpur, Anthony decided to work outside the insurance company investment
regime and to focus on more results-driven areas of personal finance. On
the retail side, Strategic Investment Advisers specialises in analysing
alternative investment funds, drawing on Anthony's past futures trading
and capital markets experience.
Europe
The Swiss franc is presently under scrutiny by its national authority
- the SNB headed by Gehrig - as it makes 4 year highs against the US dollar.
Despite threats of intervention to scare off speculative trades, I see
no signs of the forecast rebound and believe myself that the 'swissie'
is destined to reach 1.3200 later this year. The traditional safe-haven
currency is given further stimulus by N. Korea's threat to leave the Nuclear
Non-Proliferation Treaty and the prospect of a US-led war with Iraq.
TRANSLATION: THAI-ENGLISH / ENGLISH-THAI
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The same can be said of the euro, that has just about everything going
for it at present, both fundamental and technical.
Now trading at close to the 1.0600 level, the currency - with intermediate
corrections - is likely to trend higher over the next few months. In the
UK, however, rising crude oil prices and a mild inflationary effect are
causing a pullback in the strengthening of sterling at this time. But the
longer term prospects for the British pound are strong, and if certain
key levels are breached, might indicate an eventual return to the values
of 1974 and the Bretton Woods Agreement.
Canada, Australia and NZ
The Canadian dollar , known as the 'loonie', has completed - in my analysis
- its multi-year weakening against the greenback. After some dithering
last year, we are headed into rapidly strengthening mode.
The 'aussie' is presently trading over 58 US cents and looks to be targeting
60 cents before taking a breather. And in New Zealand, multi-year highs
are being achieved by the local dollar as economic strength lends support
to the technical trend.
As I said, we are living in an extremely interesting time with regard
to currencies and the global economy!
A natural product which began development in a Bangkok test tube in
1987 is now grown in 15,000 square meters of ponds near Sanpatong and exported
all over the world.
Chinese zoo officials will visit Chiangmai's proposed
site for the expensive air-conditioned quarters being prepared for a mating
pair of giant pandas. (...).
Anthony
G.Purkis
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