I haven't noticed the Japanese rushing into either currency. There is only
one currency and that is the dollar. All commodities are priced from this.
The price of a product is not greatly determined by exchange rates.
Efficient manufacture relates costs to commodity prices and at the moment
many of these are dropping in real terms. The Euro is a banana republic
currency, IMO the current rate should be around E1.7 to the £ and
correspondingly to the dollar. The Huf House price paid variation
demonstrates poor commercial skills. If they had purchased a US house
kit(heaven forbid) the price would have fallen by I guess around 10%.
Currency variations are a fact of life and if your business can't cope with
them then there is no hope for you. Manufacturing industry is rushing
offshore because the present government is increasing the manufacturing
overhead costs far above those of the competing nations. It also makes more
sense to put your factory in Poland when shipping costs to the continent are
My observations on the product are:-
1) £0.5M and no garage?
2) How much is the window cleaning bill?!
3) How much are the maintenance costs going to be in our very wet climate?
Unfortunately there is one 'commodity' most companies use quite a lot of and
isn't priced in dollars - labour !
It is quite legal to set directors pay on dollars but not employees. When
almost your whole market uses dollars (i.e. an exporting company - the ones
we need most) this is bad news.
Hate to say it, but if you can't absorb a 20% currency shift, then you
shouldn't be in business. If your labour costs are that high, then you're
either in the wrong country or the wrong business.
That was my point. The business did move almost all manufacturing abroad.
Problem is that at this rate there won't be any manufacturing (i.e. basic
wealth creation) in this country - there simply isn't the value add to cover
UK labour costs.
yup, but at what price does this gamble come?
with a transaction such as this what you want is certainty - all of your
economic considerations will have been worked out at a particular exchange
rate, and if you're not in a position to be able to absorb any negative
currency swings without pain then forget about the chance of paying less if
things do happen to go your way and take the boring-but-safe option.
email me at
richard at olifant d-ot co do-t uk
Not necessarily. That's why they lose money. Besides, these people could
have bought a futures contract from IGIndex or Cantors.
Or even just opened a euro denominated account and done all the currency
transactions at one go.
"The road to Paradise is through Intercourse."
[email me at huge [at] huge [dot] org [dot] uk]
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