A hole in my pocket

Relocation opens up many opportunities for learning. It’s surprising how many new talents you begin master half a world away from home. Take currency exchange rates as an example. I’ve become a passionate observer of global currency movements over the last few years.

Since arriving in London we’ve watched the rate for the Australian dollar rise a high of £1.00 = A$2.54 in January last year, before falling to a low of A$2.04 in May this year. That’s a depressing 24.5% loss in value. The chart above, generated by ozforex, shows just how dramatically the Aussie dollar strengthened against the pound over the last three year.

Throughout this period Garry and I have been transferring money to pay our Australian mortgage. It been a constant challenge trying to predict rate movements and secure the best deal. We even have automated email alerts set up to warn us of favourable changes. However, I’ve never been able to secure a rate higher than A$2.49. The worst rate was a depressing A$2.04 offered two months ago.

This week I’ve watch the rate improve almost 4% in three days. I can live with large swings over 18 months, but the same swing in a week simply hurts. On Monday I shifted a large sum of money believing the rate had stabilized. I bet wrong. I could have earned an additional A$1,500 if I’d completed the same transaction today. It’s hard not to feel the loss.

Of course, the forex experience isn’t all negative. Since our arrival in late-2005 the pound progressively strengthened against the US dollar. The rate peaked earlier this year at £1.00 = US$2.10. Holidays in the USA soon became a bargain. It also meant that every store in New York automatically offered a savings bonanza regardless of the price tag. Sadly, the permanent bargain hunting has come to an end. This week the US dollar rate fell below $1.75 for the first time since April 2006.