An Opportunity to benefit from Sterling weakness
By Vivian Nagel, MCSI

February’s official statistics show that the UK National Debt has exploded to £848 Billion or 60% of GDP. Also, the Public Sector Debt borrowing for 2009/10 is estimated to be £178 Billion or 12.6% of GDP. Everyone is aware of the Greeks potential debt default whose deficit is 13.6% of GDP. It is estimated that UK national debt will rise close to 100% of GDP by 2012. Clearly, this is unsustainable and should lead to a steep drop in the value of sterling.

Many British expats living in Cyprus still hold the bulk of their investable assets in Sterling and are concerned with its continued weakness.

By investing into currencies whose Governments were prudent when economies were booming and now have surpluses, we can protect against further Sterling weakness. There are various currencies available that are backed by surpluses as well as natural resources. Unlike Singapore and China whose economies depend on revenues from exports from the sale of services and manufactured goods, the advantage of our strategy is that commodity rich countries will always be earning revenue through exports of raw materials irrespective of the cycle of the global economy.

Australian Dollar

Australia has been blessed with minerals and is one of the world’s largest providers of natural resources. Also, exports include agricultural goods such as sheep, wool, wheat and beef. Unlike other developed nations such as the USA, UK and EU who cannot raise interest rates due to weak economic growth, Australia has raised interest rates 6 times in the last 7 months from 3 to 4.5 %. This is a sign that the Australian economy is booming and the A$ should continue to appreciate as more money is invested into it.

Canadian Dollar

Canada is another of the world’s leading exporters of natural resources. They export Oil, Gas and over 60 minerals and metals including gold. Canada has 10 % of the world’s forests and is the largest global exporter of lumber. It has foreign exchange reserves of C$ 57 Billion. The C$ has appreciated by 4% this year against US $ already in a period of time where the US $ has appreciated significantly against both the Euro and Sterling. C$ has appreciated by 9% against Sterling this year and this is expected to continue due to the high cost of servicing the UK debt.

Brazilian Real

Brazil is the largest country in South America and is the World’s 5th largest country by geographical area and by population. It has abundant natural wealth and is home to the world’s largest rain forest, the Amazon. Brazil exports natural resources such as oil, gas, iron, lumber, textiles, coffee, orange juice and soybeans as well as manufactured items such as aircraft, automobiles and steel. It has foreign currency reserves of $236 Billion and will spend a large part of its surplus into new infrastructure in the next few years as they will host the FIFA World Cup in 2014 and the Olympic Games in 2016. This will greatly accelerate the country’s progress and contribute to higher exports and revenues in the years to come.

Norwegian Kroner

Norway is one of the largest oil exporters in the world and has no national debt. Successive Norwegian Governments have prudently managed the surpluses earned from oil revenues. Most of this surplus has been kept in the Government Pension Fund which now has a balance of $210 Billion. In the past 10 years, the Norwegian Kroner has appreciated by 33% and 34% respectively against the US Dollar and Sterling and this can be expected to continue due to the increasing USA and UK deficits.

We are presently offering a 100% capital protected investment based on the above fundamentals. The key features are:-

4 Year term (maximum)

Denominated in Sterling

Linked to an equally weighed basket of the Australian Dollar, Canadian Dollar, Brazilian Real and Norwegian Kroner

Participation of 160% of any upside in the value of the basket against sterling

Daily Liquidity

Full return of capital if held to maturity


For further information on how you can protect your sterling and enjoy growth against the strong currencies above, please contact me.

Mrs. Vivian Nagel, MCSI
Hollingsworth International Financial Services Ltd
Tel: Cyprus +357 99579149, Malta +356 21316298
E-mail: viviann@hollingsworth-int.com Website: www.hollingsworth.eu.com
Authorised by the Malta Financial Services Authority to provide investment services, license IS/32457