The falling pound

[fountainhall]

Discussing who is at fault is surely a secondary issue. The fact is that various factors account for currency movements and those who gamble on future movements are in a crap game.

For whatever reasons, the pound has tanked. But remember it has tanked before. Back in the 1980s it got so close to parity with the US$ that Margaret Thatcher had to persuade the Sultan of Brunei to buy sterling and avoid a total crisis. In the same decade, pressure from the Reagan administration forced the Japanese to increase the value of the ¥. From almost ¥260 to US$1 it rose to ¥110. Some suggest this was a part of the reason for the Japanese recession which was to last for over 20 years.

I'm thankful I learned the lesson early. I lived in Japan for two years as the ¥ was rising but was paid in US$. Not that it affected me much as I was on expatriate terms and allowances and so shielded from the worst effects. But it was a good lesson with a view to eventual retirement. For the time being most of my funds are in Hong Kong in HK$ which is linked to the US$. Soon I will diversify. Thankfully very little of my income comes out of the UK.

I agree entirely with goji. Anyone planning to retire in Asia should start building up assets within Asia as early as possible. Let's just be thankful that we're not Brits living in Malaysia because the Ringgit is also tanking!

[Dalewood]

Discussing who is at fault is surely a secondary issue. The fact is that various factors account for currency movements and those who gamble on future movements are in a crap game.

For whatever reasons, the pound has tanked. But remember it has tanked before. Back in the 1980s it got so close to parity with the US$ that Margaret Thatcher had to persuade the Sultan of Brunei to buy sterling and avoid a total crisis. In the same decade, pressure from the Reagan administration forced the Japanese to increase the value of the ¥. From almost ¥260 to US$1 it rose to ¥110. Some suggest this was a part of the reason for the Japanese recession which was to last for over 20 years.

I'm thankful I learned the lesson early. I lived in Japan for two years as the ¥ was rising but was paid in US$. Not that it affected me much as I was on expatriate terms and allowances and so shielded from the worst effects. But it was a good lesson with a view to eventual retirement.

Fountain and I may have been in Japan at the same time. As memory serves, the rate was about $1=Y160 when I arrived, so at Y260 life was pretty good!!

To give you an idea...

Train to Tokyo: Y1200 round trip
Decent food dish: Y500
Better food dish: Y850
One drink at gay bar (No go-go boys, etc.): Y500
My share of love hotel: Y2500
Regular hotel room: Y5500
Run of the mill sushi: Y200 per two pieces

No tips expected for drinks and food. NOTE: You could certainly spend astronomical amounts for food and drink if you wanted to, but it was not necessary. My rule of thumb was to avoid places that accepted credit cards to avoid unpleasantness when it was time to pay the bill. It may sound silly, but it worked.

So if I got lucky and my "acquaintance" had his own place, I could have a good time for $25 US in a first-world capital city.

[fountainhall]

So if I got lucky and my "acquaintance" had his own place, I could have a good time for $25 US in a first-world capital city.

I never found Japan expensive back then unless I had to take a client out for an upmarket dinner, but then that was covered by a generous entertainment allowance! With an apartment provided for me in Hiroo and just 4 subway stops to work, lunch with soup and a main course in a tiny Japanese restaurant near the office for ¥700, gay bar drinks around ¥500 and no money boys, I saved a lot during my time there.

[goji]

One drink at gay bar (No go-go boys, etc.): Y500

Japan does have host bars, where for about JPY 15000, you can take one & have an hour in bed, or whatever takes your fancy. To be clear the 1 hour is fixed, but they will do anything specified on their page in the catalogue, which is generally all the usual options. And with a smile.

On the foreign exchange issue, the 10 year data JPY-GBP rate shows how far things can move.
Current rate = 139.6
Highest rate = 249 2007
Lowest rate = 117 2011 ie less than half the 2007 rate.

Actually even in 2008, the lowest rate was about 126, so almost halving in very little time.

I make 2 Conclusions

1 Anyone holding one currency and spending another needs to consider that very large currency movements are possible. To mitigate this, they could consider investing in overseas assets to reduce the risk.
2 Gordon Brown really made a pigs ear of running the show.