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A reason to thank the US financial markets?

25 April 2008

UK financial markets haven’t had a lot to thank their US peers for during the past six months. However, recent currency fluctuations mean UK investors may be able to cash in by investing in US dollars.

Last week, the pound rose to its highest level against the US dollar for 26 years, breaking the $2 mark. The rise is said to be due to unexpectedly high inflation rates which have led to rumours of interest rate rises next month. For British overseas investors, it means that their US dollars go a lot further.

Claudio Rois, movewithus investor director, said: “This is why it’s so important that investors keep an eye on global financial markets. It's likely that, in the future, the US dollar will strengthen, meaning that when investors change their dollars back to pounds, they could receive far greater returns."

Think about it this way – you invest $20,000 in an investment today and it costs you approximately £10,000. Five years later, the dollar has strengthened and is worth $1.50 for every pound. You sell your investment for $20,000, change your dollars back to pounds and receive £13,333 – and that’s not including capital appreciation!

We promote a number of investments around the world that give clients the option to invest in US dollars. These include hotel and lifestyle investments in Panama and the Dominican Republic and Project Greengold, our unique arable farmland investment in Argentina.

Claudio Rois said: “Obviously, we’d urge caution when investing this way; you’re essentially playing the financial markets. However, in our experience, it is likely that the pound will not reach these levels of strength for a long time. In the coming years, the dollar is likely to move closer to the pound as financial markets settle."