The Battle Continues in 2013
One common question is to comment on currency FX and what we see ahead for sterling in particular.
So far this year sterling has fallen against the euro from the turn of the year at 1.22 dropping to 1.14 before Easter to be sitting now around the 1.18 mark.
The value of these two currencies will vary depending on market confidence behind the strength or perceived weakness of the UK and European economies.
In Europe, economic confidence is low, interest rates have dropped again and comments from the European Central Bank suggesting that negative interest rates are not inconceivable in an aid to boost the Eurozone economy have seen the euro falter.
In contrast a recent pick up in the UK economy has lessened the chance of further monetary easing and asset purchases in the near term by the Bank of England leading to strength behind the economy and the currency itself.
We would suggest caution during 2013 over which currency will prove the stronger and that any individual investing for income and looking for better returns should take practical, professional advice before making any decisions.
We will continue to update you in our regular feature on Foreign Currency.
What effect will the stimulus made by the Bank of Japan to stimulate the Japanese economy have on the World markets?
ReplyDeleteThe effect of continued Bank of Japan stimulus has had a positive effect on the main Japanese index the NIKKEI however the stimulus is being used differently in the Japanese stimulus plan. Japan has for years been stuck in a position of low interest rates , deflation , a weakening yen and an ageing population.
ReplyDeleteThe Bank of Japan has set targets on economic growth but also target for inflation at 2%, whilst most other countries want to get a handle on inflation Japan is positively encouraging increased prices. This fits in nicely with the recent move to increase sales tax in Japan by 3%, again this move is to encourage price movement something which has been a major problem in the country for years.
World markets have been volatile during the summer months being particularly affected by perceived bad news but overall the trend has been positive with also more good news on growth figures from the major global economies.
Finally on the Japan front, Tokyo has just won the candidate race for the 2020 Olympic Games , this decision will lead to upwards of a 10 billion USD spend on games venues alone a great boost to the Japanese manufacturing and construction sector which has long been reliant on government assistance.