British Currency Taking a Hit

Those who make a point of following currency exchangexchange-related news will likely not need to be told that the British Pound has not fared well in recent times. In fact, it’s fair to say that little good news can be found related to the performance of the Pound recently. A series of repetitive, volatile swings in pricing earlier in the month have left investors somewhat rattled. The Pound has consistently performed poorly against the dollar recently, mainly due to strong economic indicators in the US and continued instability throughout the European Union and the United Kingdom at large.

That being said, it is also important to note that the British pound has been unable to hold value against the EU dollar as well. Earlier in April, the pound was unable to shake investor worry and continued to slip well below expectations. This continued poor performance resulted in a chain reaction of slides against global currencies, including the Hong Kong Dollar and the NZ Dollar. The pound also performed poorly against the Australian Dollar.

Although the month began in a rather turbulent fashion, recent news is far more encouraging. Many analysts are now confident that the downward trajectory of the British Pound has been all but abated. Also, it is important to note that dubious signals related to the strength of the US domestic economy have caused the American Dollar to slide relative to the pound. Neither nation, it seems, has much to be thankful for when it comes to long-term optimism. However, it will be quite interesting to observe precisely how the looming threat of Brexit continues to influence the value of the Pound. After last year’s rather mundane period of sedentary activity, recent global politics have once again swung FX markets into action and ensured that traders are on they toes. For those who are considering whether or not now is, indeed, the time to reconsider investment in the Pound, a growing number of experts are adopting buy positions on the currency. The outcomes of big bets on the currency exchange will likely be revealed in the upcoming weeks as the currency moves towards stability.

Is there such a thing as a money tree?

Money is the key to the modern world. Our lives pretty much revolve around it or at least depends on it.

No, there is no money tree that is magical. The magical money tree is something that has been heard of all around the world. Even the prominent people of the world, at one point in their lives used this phrase. However, this phrase is completely false. This is because if it was true, we could not be having limited cash in circulations and central banks could be issuing limitless amounts of it

Giving limitless amounts of currency to the public is not a good practice. This is because according to the bank of England, who aims to ensure that the growth of money is according to its objectives of maintaining low as well as stable inflation.

If there was an endless amount of money, it would have little value for all. This is the true restriction on creation of money as policymakers are always on the lookout not to overproduce it. Producing money is not as easy as talking about it, but a very complex process that depends on skill and luck. Commercial banks create money through some activities like issuing loans to the public. Loans are often limited by government, and can destroy families and businesses easily.

A magical resources-producing tree does not exist and neither does magical money. There is not enough money and resources in existence to meet each and every need and expectation.

Investors who work tirelessly to make their ends meet, definitely do not trust politicians with the so-called tree. Therefore, the power over the supply and circulation of money is taken very seriously by the known major investors.

In 1997, the financial markets welcomed a move of monetary policy powers to be handed down from the politicians and the Treasury to the Monetary Policy Committee (MPC), which is a strong team of nine. These monetary policy powers were formed on the basis that the government was not trusted as being in charge of the interest rates as well as other monetary policy instruments. Therefore, the financial markets entrusted technocrats like Monetary Policy Committee with monetary policy powers. This led to independent banks with least borrowing costs from the government, which is clearly represented by on 10-year bonds.

Investors were very excited to see that they were no longer controlled by the government. The government was no longer the key monetary policymaker. An example is drawn from England where Ken Clarke is said to have ignored the advice of Eddie George on interest rates who was the governor of the bank of England. This ignorance was because he wanted to ensure that the economy was growing rapidly as the election was approaching.

Comparing the yields on US and UK government bonds within a 10 year period, maturity stood at 1.8 percentage, which points in the decade before the Bank of England became independent. Consequently, Martin Weale, who is a member of the MPC attributed the central bank’s independence as a foundation of credible policy making, which ensures that the public have faith that it is free of political interference.

This clearly shows that there is no money magic tree. This clearly shows that there is no money magic tree. This clearly shows that there is no money magic tree. Monetary policy makers make sure that the money that is in circulation is just enough so as to maintain the value of money.

Have banks ignored the lessons taught from the crash?

Many people tend to recall very well some of the terrifying events occurring on 15 September 2008, when Wall Street bankwent under bankruptcy. As these sad news broke out, the atmosphere was filled with panic. Many were restless and could hardly find ways to transfer their savings to safer banks.

This situation was very frustrating as people just sat looking at their screens like statues not knowing what to do next. Even if there were some opportunities to be explored, they could not act since they were paralyzed. Phone calls were coming from family members giving suggestions to get as much money as possible out of the banks. Now as they try to recall those days, they feel humiliated by their vulnerability.

Two years later, these people who were very terrified when the incident occurred, they spoke as if they were not shaken by the event. However, the families who phoned their loved ones said that they were experiencing a domino effect. What they were afraid of is that the going into bankruptcy at such a huge institution could halt the financial system. This means that it could have been impossible to withdraw their money, and credit flow seized. This financial crisis was close to causing total failure of the global financial system. If this situation had occurred, then the global trade would have stopped working within a short period.

After the crash and threats of 2008, there has been a lot ignorance among the members of the public the political mainstream. The financial field tried as much as possible to hide the reality from the media by portraying themselves as innocent and that the crash was caused by greed or by some fault amongst the respective bankers. Even after the affected banks declared the need for significant changes in structure, people had doubts and questions about the reality of the crash.

Investigations began into the matter as well as reconstructions by writers, journalists and politicians. Many books have been published on this crash with extensive hearings and recommendations. However, they have not been given much attention by the public as they totally ignored the tragic event.

Major bank set money aside to refund customers for wrong foreign exchange payments

If there wasn’t enough grief already in the world of foreign exchange, the latest news emerging from Barclays is likely to cause a new round of complaining and frustration amongst British travellers. According to a recent report, an internal probe within Barclays discovered that the company had been exchanging currency for their customers at incorrect rates between the years of 2005 and 2012. Essentially, customers who had visited the bank during this period in order to exchange domestic funds for various international currencies were likely given less money in return than they had rightfully deserved. Now that the probe has unearthed this controversial information, Barclays has announced that they are setting aside nearly 290 million pounds sterling in order to ensure that they can properly compensate all of those who may have been “short-changed” by this oversight.

It seems as if stories such as this are abundant throughout the foreign exchange industry. Over the past several years, a number of high-profile controversies have occurred regarding the rigging of the wildly frenetic foreign exchange markets and bureau de change locations. In many of these scenarios, banks found guilty of illegal actions in the fx markets are now being sued by their former customers.

It is also important to note that this is not the first substantial monetary loss that Barclays has incurred this year. In May, Barclays was forced to pay a 1.53 billion pound fine due to accusations of fx market fixing. In another recent incident, it was discovered that Barclays employees were verbally offering customers less than optimal exchange rates on foreign currency and then keeping the difference between their stated rate and the actual exchange rate at the time.

According to David Buik, a broker with Panmure Gordon, the fact that Barclays has taken the initiative and announced this new compensation package for their clients is an attempt to minimize the fallout from the situation at large. Transparency has also been an issue in the fx markets, and yet, in recent years, it seems as if bureau de change locations and other foreign exchange services have developed a particular dubious reputation. It will be very interesting to observe what, if any changes will be made in both the short and near future to ensure that these types of problems are properly dealt with before they become a public grievance. If banks such as Barclays are to preserve their relationship with the general public, scandals such as this must come to an end as soon as possible.

Has a major newspaper been used as a front to scam people of money?

In what is likely going to be one of the most alarming and noteworthy stories in recent months, it has been discovered that a series of frauds have been perpetrated by criminals pretending to be members of the journalism staff at The Sun. According to a number of victims who have come forward, these fraudulent calls have involved the criminals making claims that the victims would be allowed to feature in the paper for a fee that would later be refundable.

What is so fascinating about this particular scam is the degree to which the criminals were able to mimic the staff at The Sun. According to one of the victims, “What made this so shocking and clever was that they called me from the Sun’s number and emailed from the Sun’s email address…” With this information in mind, it seems much more reasonable why these victims were convinced that the offer they were receiving was, indeed, genuine.

When asked to comment on the issue, a member of the staff at The Sun stated, ““We have had about 15 [cases] reported to us and, as soon as that has happened, we have referred them to the police.” Have more incidents of this particular fraud occurred? The stigma associated with fraud victimisation has likely led many individuals who may have been affected in this particular case to remain silent. Many of those who have come forward have also chosen to remain anonymous.

Although the details of each scenario outlined by those victims who have come forward varies slightly, one particular incident is quite interesting. According to one of the victims, who has chosen to remain anonymous, a man pretending to be a member of the staff at the paper contacted them and explained that the paper was currently running short on content. In order to meet its pending deadline, the individual explained, the paper would send a reporter to interview the victim. That being said, the fraudster then explained that the reporter must be paid for by the victim. However, following the acceptance of the story by the paper, the funds would be returned. According to the victim, “He asked me to email him an image of the bank transfer to the writer. I did. He told me she [the freelance journalist] would call me shortly. I waited. I waited. My heart started beating. I called the Sun and, after a second attempt, they finally said there was a scam going on like that and that they were investigating…”

In retrospect, of course, it may seem slightly more obvious that such a claim would, indeed, be fraudulent. However, given the degree of authenticity which the scammers were able to display, it is no surprise that so many have been duped by them.

The Sun has released yet another statement claiming that every case of fraud related to this particular incident has now been forwarded to the UK’s national fraud and internet crime centre, referred to as Action Fraud. Although the perpetrators behind this scheme have yet to be apprehended, the paper hopes to spread awareness of the scam in order to ensure that others can remain vigilant and be on the alert in the event a similar call comes through to them.

Is there a method by which an individual can fully protect themselves against internet or telephone fraud? Given the fact that so many of these schemes are quite elaborate, it can be difficult to say with 100% that any individual is truly “protected”. Organisations such as Action Fraud continue to emphasise that those who have any doubt at all regarding the claims of a caller or in-person encounter should contact the appropriate authorities before engaging in a transaction. Only through such early actions can the likelihood of fraud be reduced nationwide.

Bureaux de change caught up in money problem

Following the introduction of tighter rules on money laundering, small money transfer shops and independent bureau de changes are facing closure in their hundreds. The rules initially meant to prevent laundered money from recycling into the economy, however, seem to have led to ‘small-money’ businesses (SMBs) getting denied access to bank accounts and subsequently foreign currency. A move caused by the banking sector’s perception of the SMBs as too risky.

An example of one business in this predicament is a 30-year family business in Stamford Hill London, by the name Marvelpride. The company finds itself in a fix following its foreign currency supplier – Thomas Exchange Global (TEG)- ending their relationship due to continued demands from its bank RBS to do so. With foreign exchange accounting for two-thirds of the business’ transactions and with only six months to find a new supplier in the already limiting situation; Mr. Goldman the owner, fears they may run out of business.

The Association of UK Payments institutions, executive chairperson, Dominic Thorncraft, said many of the enterprises under the organisation started closing as early as December 2012 following the closure of their bank accounts by an undisclosed bank. Surviving businesses were forced to pay higher service fees to gain access to foreign currency from third parties.

Mr. Thorncraft, on the other hand, said there was a new Payments Services Directive, which would prevent banks from closing SMBs accounts in the above manner; however, the directive was two years away from its implementation.

In August 2015, Business Secretary, Sajid Javid, after admitting that small businesses were suffering under the new rules, announced a review of the rules. The review was meant to make sure the rules protecting the larger institutions in the financial services industry were not undermining new as well as existing smaller businesses in Britain.

Stephen Platt, the founder of KYC360.com, which conducts anti-money laundering inquiries, says banks acted in the manner they did following the publishing of the UK National Risk Assessment. The assessment termed SMBs, such as bureau de change, as high-risk candidates for terrorist financial activities. Thus, banks are not entirely to blame as they are just selective about who they want to deal with financially.

In addition to this, Mr. Platt also warned against the continued use of the stringent regulations as they were creating a financial exclusion for vulnerable members of the society such as immigrants who use SMBs to send money to their relatives in developing countries.

SMBs that are seeking to remain in business may soon have to start striking deals with new or smaller banks that do not have the capacity to manage the risk of money laundering. In addition to this, if the standards used by banks become too stringent, the SMBs may have no other alternative but to deal with underground banking systems.

Shop staff stop money scam

Two Eastbourne businesses have received commendation and praise from the local police for detecting suspicious transactions conducted by fraudsters, and saving potential victims from being defrauded of money via an elaborated scheme.

Between the 27th and 30th of November, a total of 12 Eastbourne residents were called up by anonymous people who claimed to be police officers. The supposed officers (fraudsters) further elaborated to the residents that their reason for calling was to inform them that their bank accounts had been used or were being used for fraudulent purposes.

The callers further went on to explain to the victims how they could assist them in keeping their money safe. They cleverly provided the residents with the either of the following alternatives with the aim that someone would follow through, and they would swindle that person of their money.

To either send then their account PIN numbers.
To transfer the funds from their accounts to the other account numbers, they would designate for safe keeping.
To withdraw the funds in their accounts and a courier would pick the money up from them with the notion of taking it to a secure location safe keeping.

Nonetheless, in all the cases brought forward, except one, the trick was quickly identified, and no monies were handed over to the schemers.

On the 27th of November, a 47-year-old man received the questionable call and was directed to pay a visit to his Building Society in the town that is a branch of a Nationwide Society, and transfer money in the sum of £9,345 to the fraudsters. Fortunately, the staff at the Building Society became suspicious of the transaction, and they declined to make the transfer after the man had left. When the man came back to the Building Society looking to confirm the transfer, fortunately, the staff managed to convince him eventually into not going through with it; indicating it was a scam. Unfortunately, however, when the man had left the Building Society initially, the tricky caller had made another call to the man, and he had managed to convince the man to give him £1000. According to the man, the caller appeared at the man’s residence and proceeded to identify himself as the caller before picking up the money.

In another incident that occurred on the 30th of November, a man, 82 years of age, received a similar call from a fraudster and he was directed to acquire €5000 in cash. The man did as instructed and withdrew the amount from the Bureau de Change at Marks and Spencer. Fortunately, before the man had proceeded any further with the instructions provided to him, the attentive staff at the Bureau intuitively sensed that something was amiss and urged the man not to continue.

Emma Brice, the Chief Inspector, commended the people who were receiving the calls for not getting involved in the matter but rather choosing to involve the police. She also recognised and praised the efforts of the local businesses that were on the lookout for such scams.

She added that thankfully, most of the attempts made by the callers failed because the residents who received the calls were alert and did not get fooled. However, she urged the residents who got hold of this information on the scammers to pass on a warning to their friends and relatives who may still be unaware of this current type of targeted fraud.

On another note, she encourages the residents of Eastbourne to continue resisting the notorious callers, whom unfortunately seem to be targeting the elderly and vulnerable members of society. This is mainly because; the senior citizens can easily be fooled and confused to the trickery of the schemers.

Where is the best place to exchange your money?

If you are thinking about travelling to an exotic location for the holiday season or buying a home in a foreign country, you may want to forget about Europe and consider countries in the lines of Brazil, South Africa or Malaysia. The reason for this being you will get more value for the money exchange.

Over the course of past 12 months, the Pound has gained considerable value against currencies from other countries. Topping the list of places where the Pound has strengthened most is Brazil with a rise of 42% against the local currency (Real). The above information is in agreement with data compiled by the Post Office. Their online exchange rates for purchases between £500-999 show that on the 17th of November this year, 1£ was buying 5.26 real as opposed to 3.71 real, the same time last year(2014).

Other countries on the top ten list include Russia, Turkey, Malaysia, S. Africa, Norway, Mexico, Australia, New Zealand and Hungary. Currently, the Sterling pound has gained against 75% of its best-selling currencies across the globe when its performance this year is compared with 2014’s; this is according to Post Office Travel Money’s, Andrew Brown.

In recent weeks, the pound has gained substantially against the South African rand and Malaysian ringgit; that is good news for holidaymakers visiting these countries as they will have over an extra £100 when they exchange £500.

The Euro, on the other hand, did not make it into the top ten list; nonetheless, the pound had gained 14.1% to it when it closed at 1.38 on November 17th, 2015 compared to 1.21 on the same date last year. Thus, leaving Britons with an extra £61.91 for every £500 money exchange transaction they make. This makes it high time to book your next winter break in Europe. Or, if you dream of buying a holiday home in the havens of Spain or France, you stand to enjoy buying at lesser prices. For instance a €350,000 house will go for about £253,623 unlike 12 months ago when it was £289,256; thereby saving you a hefty amount of about 36,000.

Despite the pound’s impressive performance against some currencies, it appears to have weakened against others. For instance, it had declined against the Hong Kong dollar by 3% that was considered its biggest fall against the currency. In November this year, £1 bought 11.05 Hong Kong dollars a drop from 11.38 during the same period last year. Other gainers against the pound include the U.S, U.A.E, Qatar, Oman, Barbados and Jordan. When comparing the pound against the US dollar, the pound lost 2.4% over the past 12 months. However, this is not something to stop Briton shoppers from utilising the pre- Christmas sale offers coming up in the coming weeks.

Is it harder for tourists to exchange money in Argentina?

For those who have been to Argentina in the last four years, it is evident that you have found out that the excellent deal is to have your money in big bills and exchange it illegally. Travelers from all over the world are currently receiving more for their currency, which is due to the Argentina’s banning of black and illegal markets that used to trade for 30% less that the required official rate. For Argentinian citizens who wanted the safety of dollars, they accepted lower rates from black markets as this was the only way to escape the government’s tight currency measures.

Currently, all these activities are taking another route. President Mauricio Marci, earlier this month, eliminated barriers on how many pesos can be exchanged for dollars and other currencies. The climax of those barriers led to Argentinian pesos’ official value to crumble overnight that dropping by 30% in less than 24 hours. However, on the black market, pesos rose slightly.

According to Dr. Federico Weinschelbaum, a professor and an economist at Universidad de San Andrés in Argentina, the abolition of this gap that exists will result in a steadier economy for Argentina on the long-run. On the short-run, Argentina’s economy that is running in the background is likely to rise. Those who are highly affected by this change are the ones who depended fully on the black market as the main source of income, which is clearly a significant amount.

The centre of Buenos Aires’s downtown, the extremely busy streets have been surrounded by shops and the unique ambient sound of women and men shouting “Cambio! Dolares, Reales, Euros, Cambio,” is common, giving both locals and foreigners the same best exchange rate as that of a black market for the past few years. These black market operators are referred to as “arbolitos” meaning little trees because they do not stay for long in one location as they exchange green paper. The currency that is exchanged on the black market is referred to as dollar blue. The arbolitos have been in operation for over a decade now, but in November 2011, they expanded into a big forest. The black market expanded vigorously, and it was successful to the extent that it was almost becoming legal.

Even if exchanging currencies in a location outside of a designated exchange place or an official bank is illegal, it is common in Argentina to see police officers on black markets, but they watch transactions take place without doing anything.

A 24-year-old confessed that he has been working as a black market exchanger for the past seven years. He said that he started off as a seller of city tours, but for the past two years he has been making huge profits as an arbolito. He further added that on each block there are over 30 arbolitos, which translates to about 500 arbolitos on a single street. However, it is strongly believed that these numbers are yet to reduce soon. He says that in about three to four months there will be a remarkable decrease on the streets. The arbolitos are currently suffering from the economic punch, but they are continuing with their black market business for as long as they can. For them, this means that they can go on with their businesses as long as no new law enforcement has been put in place.

Many are saying that they have been told anything concerning their black market business as illegal. Though, they have been once pulled by Argentina’s Federal Administration of Public Income. They normally don’t take anything serious as they demand identification and take some information and leave.

Pato, who is a middle-aged owner of a newspaper kiosk selling on Florida Street, also said that he just fell into the black market business because getting into it was very simple.

Is it possible to never use cheques?

TransferWise founders clearly indicated that they have never used cheques before. Kristo Käärmann and Taavet Hinrikus said that they have never written a single cheque before the internet age. “I can’t recall ever using a cheque,” says Käärmann, who is 35 years old. He further says that “For nine years that I have been in London, I have received several chequebooks during accounts opening. I wasn’t aware what to do with the chequebooks since we hardly used them in Estonia.”

Fellow Estonian Hinrikus and Käärmann, co-founders of TransferWise’ electronic foreign exchange system, have similar experiences. Hinrikus say that “The banks didn’t provide any chequebook, and I’m glad that I never touched one.”

The two were shocked to find that in their mission of preparing the launch of their foreign exchange system in the US at the beginning of this year, cheques remain operational and actively used in the US.

“Americans use cheques a lot,” says Käärmann. “The US financial system uses cheques on a weekly or monthly basis. Americans use banks differently from us. Apart from working hard to meet licensing requirements, there is a need to adjust our product to the American market. ”

This is one of the escalating pains of TransferWire that began as an easy technique of Hinrikus and Käärmann of avoiding foreign exchange bank rates when they arrived in London for work in 2007.

They exchanged between £2,000-£3,000 cash a month. They decided to bank the money in each other’s bank accounts so that they can calculate the exchange rates of British banks. Some other friends joined them and in two years together they had saved banking fee of approximately £10,000-£20,000, which gave them the idea of launching the TransferWire peer-to-peer currency exchange as an online platform in early 2011.

Currently, the business is operating in the same way. It runs some bank accounts all over the world, collects money in one currency from customers and gives counterparties in other currency, pays each country from its accounts.

According to Käärmann, the model has progressed but hasn’t changed. He says, “When we began it was just a simple idea that used euros and pounds only. Occasionally it took some days to make transfers a success. Nowadays, we are using 400 different currencies, and the transfers are very fast. Also, we are the only agent that can transfer money from the UK to France in 17 seconds or less. We have set records on speed concerning international transfers.”

Category: Money transfer