myi: Has the currency exchange market changed much since 2008?
Yes. For us, in the money transfer rather than speculation side of foreign exchange, we have seen a decline in the overall number of people sending money abroad to buy property for example, and a significant drop in the value of the Pound since 2008 which has made life harder for importers as well as expats and overseas property buyers.
Conversely, exporters have seen their sterling incomes rise. In general I would say that people are more aware of exchange rate movements than they used to be, having seen such huge volatility and uncertainty over the last 3-4 years.
For Currency Index, we rely on agent referrals for a lot of our business, so it’s more important than ever to add value to the remaining overseas agents who are still selling to Brits, so that they refer clients to us for their currency transfers rather than elsewhere.
myi: How important is London’s role in the current market?
Currency deals are executed 24 hours a day, 5 days a week around the world, so there is no central market as such (unlike in stocks and shares for example). But as the Pound is one of the 4 major currencies with the USD, Euro and Yen, inevitably a lot of trading and market movement is driven by UK supply and demand.
myi: Would the UK benefit from being in the Eurozone?
I think it’s clear now that the UK would have suffered massively by being in the Euro. The ability for an economy to set its own interest rates and devalue its currency are crucial economic levers – ones that Greece for example has not had the luxury of – and that has created a crisis which is far from over.
For me, to have the same interest rates and one currency value across such disparate economies as Germany, Greece and say Belgium or Finland, was always a recipe for disaster.
myi: How do central banks influence currency exchange rates?
Central banks set interest rates which by and large can influence a number of economic conditions such as inflation, spending, borrowing, commodity prices, house prices, and currency values.
The Bank of England for example has kept interest rates very low since 2008 to stimulate growth and encourage liquidity in money markets – but low interest rates also tend to weaken a currency (hence the tumbling value of the Pound in 2008-2009) which in turn stimulates exports.
So there is a complex web of economic interactions, which includes exchange rates, just due to a central bank’s policy. (Quantitative Easing also comes into play here, and has the same effect as lowering interest rates in devaluing a currency.)
myi: In your eyes, what has been Currency Index’s biggest achievement?
The business only launched in 2008 so it is testimony to our business plan, customer service levels and the dedication of our staff that Currency Index has grown through the recession to where we are today. That has been recognised in our OPP “Best Currency Company” award in 2010 as well as the numerous glowing testimonials we receive from clients each month.
I really believe there is no better company out there than Currency Index in terms of personal service, speed of transactions, and of course competitive exchange rates. We were also one of the first currency companies to have become FSA-Authorised in 2009.
myi: Are you seeing any market trends in the foreign exchange market?
Trends come and go quite quickly in our business; there may be a few months where a better exchange rate drives demand for property, for example in Florida or France, depending when the local conditions in one market coincide with a favourable exchange rate for British buyers.
We have also seen a solid increase in the number of transactions where clients are moving a lump sum back to the UK, perhaps having sold their Spanish property which they have lost money on in terms of the Euro price, but then gained value back because the Euro is worth so much more than when they bought perhaps 5 years ago.
Other than that, we hope the trend of increasing our client base and growing our reputation in the currency marketplace will be one that continues for a long time for Currency Index!
