Cyprus-Forum.com

[Pyrpolizer]

The actual interest rate makes no difference at all ....... but it is the flag for currency speculators to sell Sterling and buy another 'safe' currency. The dollar is dropping against both the Euro and GBP so they bought Euro's and up went the price of the Euro. Tantamount to what happened with the Brexit vote, the result didn't drop the value of the GBP ..... the speculators did.

You seem to forget that currency speculators sell for 2 reasons a)because a specific currency (in their opinion based on a number of indicators/flags) has no prospects to deliver a future profit . b)to minimize their losses when it starts falling.
Considering they work within very tiny margins of + or - 1% it's evident that currency speculators that invested in GBP are actually losing now that it's falling. So by making it look as if they suddenly found the excuse they always wanted to sell, as if they are profiting from that is imo misleading.

If the GBP was say 1.32 Euros and now is 1.10 then there's no way all this fall could be attributed to currency speculators, because that would mean about 22 rounds of speculators buying and selling GBPs at 1% loss each. The reason is not the currency speculators alone, it is because the primary currency market (the one that buys/sells goods and services for currency) started selling British products for less Euros, or it buys Euro priced products for more GBP. The latter could be because the speculators pushed the Euro up, but still that could not change more than 2%.

Both the primary currency market and the speculator's currency market have a trigger effect of course Speculators play a role but imo the main reason is the GBP is simply losing the purchasing power it had before the Brexit vote.

[repulsewarrior]

...i'll add this here, food for thought, under the guise of Brexit.

UK to double trade credit with Turkey post-Brexit, as Europe turns away on 'ethical' grounds

https://www.alaraby.co.uk/english/news/ ... ith-turkey

...it is an indication, the EU and Britain, how far they can divide themselves apart.

[Robin Hood]

Pyrpolizer:

You seem to forget that currency speculators sell for 2 reasons a)because a specific currency (in their opinion based on a number of indicators/flags) has no prospects to deliver a future profit . b) to minimize their losses when it starts falling

.
Speculators speculate to make money ......... that is what you have described and that is what speculation is ....... an anticipation of some event in the future. The problem when making predictions with currency is that the prediction becomes self fulfilling and it is their speculative buying/selling that changes the rate and this has a knock-on effect on the real economy.

Considering they work within very tiny margins of + or - 1% it's evident that currency speculators that invested in GBP are actually losing now that it's falling. So by making it look as if they suddenly found the excuse they always wanted to sell, as if they are profiting from that is imo misleading

.
I think you will find that the margins are even smaller than that and don’t forget, these fluctuations happen tens of thousands of times a second and by selling and dropping the value they are profiting by the rise in the Euro. When they have the GBP low enough, they will buy more GBP’s with their Euro’s ..... the Euro will then drop and the GBP will rise.

Any changes could be as small as 0.0001%. There is no VAT on transactions and they pay tax only on their profits, that is why a Tobin Tax would effectively halt speculation. Speculators actions are detrimental to the real economy as it benefits only the banking and financial economy which of course is not wealth creating, it simply inflates asset prices.

If the GBP was say 1.32 Euros and now is 1.10 then there's no way all this fall could be attributed to currency speculators, because that would mean about 22 rounds of speculators buying and selling GBPs at 1% loss each. The reason is not the currency speculators alone, it is because the primary currency market (the one that buys/sells goods and services for currency) started selling British products for less Euros, or it buys Euro priced products for more GBP. The latter could be because the speculators pushed the Euro up, but still that could not change more than 2%.

But it is the action of the speculators that creates the change ..... not economics. It is the change that effects the economics therefore speculative buying/selling precedes a rise or fall in a currency’s value compared with other currencies. It is the equivalent of ..... the banks create debt and that in turn creates new money as deposits in other accounts ...... debt creates deposits not, as commonly believed, the other way round. Currency speculation is the same ...... speculation causes changes in a currency’s value and thus effects the economy

Both the primary currency market and the speculator's currency market have a trigger effect of course Speculators play a role but imo the main reason is the GBP is simply losing the purchasing power it had before the Brexit vote.

I am not sure what you mean when you say ‘primary currency markets’?
The pound loses its purchasing power over short periods of time (Milliseconds to months) as a result of speculation. A change due to economics would occur over a much longer time scale and would be related to the creation of money by the banks. When debts are collected, the debt is cancelled ....... so the creation of currency in itself does not necessarily cause inflation. It is the debts that are not recovered that cause inflation as the money created by the initial debt is never taken out of circulation. Over the long term it is inflation that reduces purchasing power. A sudden change of any magnitude over a short time period, can only be caused by speculators ........ there is no other way it can happen.

Look at this chart- Thurs. Aug 3rd 2017: (it is updated every few seconds)

http://www.xe.com/currencycharts/?from=GBP&to=EUR&view=1W

• On Thursday last at 08:30 the GBP rose to 1.11981 on speculation that the BoE would raise interest rates.
• At 10:00 the speculators got the bad news that it would not change and they started to sell the GBP.
• By 10.30 it had dropped to 1.1184.
• By 12:45 it had dropped to 1.1059.
• It has since wobbled around that level.

So it lost around 1.5 cents in just over two hours! That was all down to speculation, not economics.

During that period the GBP rose in value against the USD but dropped against the Euro .... but why?

IMO: The speculators looked for another safe currency ...... the USD was not a good bet because of their internal political turmoil and also the imposition of further sanctions on Russia et al. So they bought Euros in large quantities and this increased the value of the Euro by a much larger percentage than if they had split between the Euro and the USD. It really has nothing to do with economics ........... it is not the real economy that is in trouble ....... those troubles are caused by speculators.

What did that do for the economy? Absolutely nothing but harm and of course knocked another 1.5 c off the exchange rate on our pensions!

[miltiades]

Robin, it is not rocket science mate. The pound has practically crashed because of BREXIT.
The fact that you have supported all along Brexit has clouded your judgement. Why after Brexit did Stg not rise ??? Do speculators only speculate in falling currencies?
The one and only factor that has cost you a lot if dosh in your pension, and mine, is the Brexit .
The biggest mistake the uk has made in its history.
The second will be when the UK recognises , if it allready does not, Sharia law and bans the sale of ...pork !!!!! I love my bacon !!!

[Robin Hood]

Milti:

Robin, it is not rocket science mate. The pound has practically crashed because of BREXIT.

I don’t think that is true! It is in every way as complex and interactive as ‘Rocket Science’ just different and I like to know how things work. What you are quoting is Step 1 (Brexit) you are then quoting step 99 (£ Drop in value) ....... I am curious and like to know what makes things tick! I like to know what the other steps are in between 1 and 99 which is maybe why I see it in a different light to you?

The fact that you have supported all along Brexit has clouded your judgement. Why after Brexit did Stg not rise ??? Do speculators only speculate in falling currencies?

Speculators are the CAUSE of the rise and fall of currencies due to their speculative buying and selling. Now ask yourself ..... can you be sure that the pound would have risen had the vote gone the other way?

The one and only factor that has cost you a lot if dosh in your pension, and mine, is the Brexit .

I disagree ...... it is bloody speculators and bankers that have cost you and I money.

(Brexit) The biggest mistake the uk has made in its history.

We will have to wait and see on that. But to go off thread a bit, take a look at what is happening in Europe! Merkel is pissed off with the US as their unilateral declaration of further sanctions on Russia are about to impact the European economy whilst having little or no impact on the US economy.

Then the Poles are rocking the boat and want war reparations from the Germans and so do the Greeks. The EU is threatening to kick Poland out of the EU for non compliance with their rules. There are also several countries who have refused to take their quota of refugees, including Poland That alone could damage the Euro and if the UK is outside of that, with its own sovereign currency, it could be a great advantage to the UK who can take up the slack.

Then add the shinanikins going on in the US to the melting pot and they don’t look too clever either, that is why the USD is dropping against sterling. Sterling has, and is, dropping against the Euro but IMO I think this will be a temporary blip and events in Europe and the US will reverse that trend.

As for the Muslim effect ..... didn't Enoch Powell predict all this? He was regarded as a racist ..... but he was right all along.

Among the ‘experts’ there is a growing consensus that the financial system is heading for another collapse, the impact this time will be much greater than that of the 2007/2008 crash. If that happens we are all in the sh*t!

So, smile and catch a few more fish .... it could soon be your means of survival !

Added 20:27. This is what will boost the GBP........

Europe is both for and against Russian sanctions simultaneously.

http://theduran.com/europe-russian-sanctions-simultaneously/

[repulsewarrior]

...curious RH, have you read your Marx and Engels, instead of what is said about it have you read their work?

England is free at the moment to promote their credibility independently. She will be in competition with the EU; it makes the balance far more complex indeed (I don't think that this will be pretty).

...fear of the unknown, a communist would say is unreasonable, it is the future what is natural.

Whether we have learned our lessons from the Great War, and the era which preceded it is yet to be decided, Lest we Forget.

I don't think that ICE, and Institutions like these are prepared to leave England, Europe does not have the same facilities for exchange, it goes both ways the BREXIT; but "who" is in control, that's a given.

...confidence is the only issue. If the British people thrive through their own innovation, 40 years from now, as wrong as it seems this decision, it will be the right one.

...what with the way England and Germany/France will become countervailing powers; the EU, like Britain, as in Class War, i suggest will be less apt at exploiting the Poor now that "they" themselves have put each other at the opposite ends of "power". We may witness a greater EU, and a greater London, as a result exposed to the comparison accountable to each other that way, rather than accountable to themselves, alone. It is not a zero sum game, life is movement, it is fluid, and far more complex than the many players can surmise. Thus while everything dies, it is unending as a cycle where life as it is adapts. Only change can be counted upon.

If you have faith in humanity, be happy, this is what you can do for the greater good. (who is the greater Communist, Stalin or Trotsky?)

I recall the Occupation Movement, how quickly it grew, it happened, failure or not. Reaching the end of Capitalism will still take a while, what are the Capitalist have their choice to Socialise, what with machines creating machines they may be forced in a position to do so, (and "they" know this). Yet what is instant communication while Free, is Free for only as long as it does not "belong" to someone. As it is there are still enough of us who are not Poor to wish Rich people well, i am guessing Rich people would like to keep it that way, even though they will take more responsibility toward the externalities that "they" created, that can be managed,

...and if there are less Poor people (less Sick, less Hungry, less Ignorant (in some ways)) that is a good thing too.

...more directly speaking, what about Cyprus, BREXIT, the cost to Cypriots with Turkey and Britain back at the table as though it was long before the Treaty of Lausanne and out to make this kind of "deal". How will the EU handle that, Turkey and Britain allied against EU policy and positions... (crazy at is, think submarines)

on another note yiasou milti, always thinking about you, haven't said hello for a while, glad to see you are about. Souvla in the mountains milti, beer along with the wine, under the shade of the one Flag stretched out like a tent, that i would feel no shame to sit beneath it as a Cypriot, the Flag of Cyprus, with you. Even if it was the pity, knowing that in such a simple act, that in doing so i risk death i imagine such a time is a good time.

...I want to know about xorta, if you have a garden, and if not a garden a local farmer well worth visiting, beside the olives and the cheese that dress your meals what are the best, what is a good salad for you, (just curious, you surely know how to eat well and how to serve it) what is a good oil, what have you found truly Cypriot, and where one can get something authentic like sun dried nuts, where is a nice little cafe along the way, smells, some photos; what is that topic's title?

(talking money, this thought crossed my mind)

A man as enterprising, i would like to say Maple Syrup, other Food Products, aside from what can be exported to the Canadian unknown, from Cyprus with you i would be interested.

[Pyrpolizer]

Speculators speculate to make money ......... that is what you have described and that is what speculation is ....... an anticipation of some event in the future. The problem when making predictions with currency is that the prediction becomes self fulfilling and it is their speculative buying/selling that changes the rate and this has a knock-on effect on the real economy.

But who are they who we call "speculators"? Aren't they mainly the big international Banks and investment funds? And why do they buy/sell currencies? Isn't it because there is a primary market i.e those people and companies who need foreign currency to buy goods and services from another country, to whom those speculators would sell the foreign currency? If this primary market wouldn't exist, the currency speculators wouldn't exist on the first place.
Sure those speculators discovered the trick of trading currency for currency to maximize their profits but the fact remains that the reason they exist is the need of people to buy foreign currency.

Any changes could be as small as 0.0001%. There is no VAT on transactions and they pay tax only on their profits, that is why a Tobin Tax would effectively halt speculation. Speculators actions are detrimental to the real economy as it benefits only the banking and financial economy which of course is not wealth creating, it simply inflates asset prices.

Of course it would limit speculation, but on the other hand it would have severe effects on a)the ease of access to foreign currency B)it's availability c) low exchange rate prices and fees. Those who don't take such measures are not stupid you know...

But it is the action of the speculators that creates the change ..... not economics.

How do you know that?? It's actually the real economy that flags the speculators to start selling. By the minute Brexit was announced all foreign demand for GBP for investments in the UK was put on hold, isn't that true? It's simple supply and demand rule. Less demand equals less exchange rate for the GBP. Undoubtedly there's also the speculators multiplying effect of selling large volumes of GBP that pushes the exchange rates further down that what it should be. However, theoretically at least, this multiplying effect balances out with another historic multiplying effect that had pushed the exchange rate of GBP upwards in the past when there was too much demand for it.

The pound loses its purchasing power over short periods of time (Milliseconds to months) as a result of speculation. A change due to economics would occur over a much longer time scale and would be related to the creation of money by the banks. ....
...So it lost around 1.5 cents in just over two hours! That was all down to speculation, not economics.

That's true. The reason is because speculators make a profit by predicting future changes in economics. They take action now before it will be too late. However look at the effect. It's more or less 1%. Probably another 1% next day and another 1% the one after next.This is more than enough for all speculators to have reached the absolute minimum reserves of GBP they need to serve their clients of the primary market. Now do you honestly believe that the drop of GBP from 1.3 before the Brexit vote to 1.10 of today is because (or by most part) of the speculators??

[miltiades]

Good post.
Just one correction . The MMR of Sterling just a day before the Brexit results stood at 1.38. A significant drop of 28 cents against the Euro, as it stands today.
£10,000 then would , at MMR rate be worth €13800 , today the same amount is worth €10100.
Brexit was the ONLY reason Stg lost so much.

[Robin Hood]

Milti:

Good post.

Just one correction . The MMR of Sterling just a day before the Brexit results stood at 1.38. A significant drop of 28 cents against the Euro, as it stands today.

£10,000 then would , at MMR rate be worth €13800 , today the same amount is worth €10100.

Brexit was the ONLY reason Stg lost so much.

Where did you get those figures from? You need to go back to 30/11/15 ..... to come up with anything like your figure, when it was 1:42 by 2/12/15 it was 1:40 and by the 7/4/16 it was 1:23. The Brexit vote was on the 23/6/16 so what do you blame this 20c drop on?

On the 23/6/16 sterling stood at 1:31 to the Euro, by the 7/7/16 it had dropped to 1:16. Today it stands at 1:10735. So the loss, still significant, is just over 20c in a year. Since Friday evening the fluctuation due maybe to computer trading and foreign traders has been between 1:10735 and 1:10720 ....... the maximum change therefore has been just 0:00015 or fifteen one hundred thousandths of a Euro over two days. WOW!

In that period of time we have seen a US trade war declared on Russia, Iran and North Korea, this has pissed off Mrs. Merkel as well as Putin: Poland has been threatened with suspension from the EU and they are also talking War reparations ............and Teresa May has just fallen off a mountain in Northern Italy ...... all quite significant European or World events ........... so why has this not caused the rates to change for GBP/USD/Euro?

Simple ...... because there are no bloody currency market traders working. As I said it is speculators that change the value by speculating on future events ...... not the events themselves, that is why it is called speculation because nobody can predict the future, it is all guesswork. The changes will start tomorrow morning around 6am .......... when they return to the office.

I really do fail to see how you don’t understand that?

Our enemy and the bastards that have cut our incomes are the speculators ..... nobody else. Take 'em out I say!

[Robin Hood]

Can I take your questions one at a time?

Pyrpolizer:

But who are they who we call "speculators"? Aren't they mainly the big international Banks and investment funds? And why do they buy/sell currencies? Isn't it because there is a primary market i.e those people and companies who need foreign currency to buy goods and services from another country, to whom those speculators would sell the foreign currency? If this primary market wouldn't exist, the currency speculators wouldn't exist on the first place.

As I understand the system:

Speculators are Market Traders and I would assume part of the banking system, otherwise how would they be able to lay their hands on the vast sums of money they have access to for funds. So they are bank employees. They play with sums equivalent to one years UK GDP .... every day. They could only access that sort of money through banks. That is how Gleeson fell down, he was gambling with banks money and lost it on bad /risky speculation.

A Company would use a bank to transfer a sterling payment sum to a Euro account through the Bank using the rates given at the time by their traders. The speculators have nothing to do with financing buying or selling goods, that part of the system is a bank function. The currency speculators are a market all of their own, like commodity market, bond market, futures market, derivatives market etc.

The currency speculators are not a requirement at all, they have NO economic function ..... in fact their actions are damaging to trade and to the economy. Until Nixon dumped the gold standard there was no such trading, at least not on the volume it is today as all currency was converted to the value of gold. Which is why the Central Banks have gold reserves. They used to move gold from one pile (say US) and stack it on the UK pile when they did their tally of international transactions. There was little speculation because the rates were more or less steady.

Sure those speculators discovered the trick of trading currency for currency to maximize their profits but the fact remains that the reason they exist is the need of people to buy foreign currency.

They exist as you say to make profits. It will be the bank the manufacture of exported goods uses, that will transfer the payment he gets paid or pays suppliers. This is the IBAN system I am sure you have used .... but again nothing to do with the speculators. It could be Euro’s but it could also be USD, even Roubles or Pesos. But this is not the speculators function ...... they just buy and sell currency making a small percentage on a vast sums of money. It is also an automatic function of algorithms in sophisticated computers which detect the sales, thousands of times a second.

That is how I understand speculators operate within the financial system, I have never found a source that explains it any other way.

Of course it would limit speculation, but on the other hand it would have severe effects on a)the ease of access to foreign currency B)it's availability c) low exchange rate prices and fees. Those who don't take such measures are not stupid you know...

A Tobin Tax would kill them this is why the banks are so against it. But if none of the speculators turn up tomorrow morning, the rate would remain flat. It would have no effect on any economy and international trading would be more predictable because they would have currency stability and could plan ahead. Prices would then stabilise and it would be down to manufacturers to compete on price and quality. They could give their customer a fixed price without having to take into account currency fluctuations, only raw material costs which will still fluctuate due to supply and demand.

You would still get your foreign currency for your holiday/business trip through the bank or at the airport but no more fluctuating exchange rates, so they no longer need a contingency factor (loaded exchange rate) against likely currency movements.

.............. I am going to bed, it’s been a long day. The dog has me up at dawn (5am) to go for a pee and then wants to play. So I get an early start most mornings BTW: Here it rained today.