Saturday, November 22, 2008

No end to the weak exchange rate

Couples who receive the basic state pension of £628 a month saw its value when converted into euros fall from €961 in January 2007 to €766 last month, according to HIFX, the currency exchange specialists. This is because the exchange rate weakened from 1.53 euros to the pound to 1.22 over the period (currently 1.18).

The continued volatility in the exchange rate means that the value of our pensions in October varied according to when in the month the money was converted into euros. The average couple's monthly state pension of £628 was worth anywhere between €766 and €816 last month, depending on when the funds were transferred, HIFX said.

Mark Bodega of HiFX said: "Britons living in Europe and receiving a fixed income in sterling are being hit particularly hard. In the last month we have seen unprecedented volatility in the currency markets, with the value of the sterling fluctuating by over 6pc against the euro, the largest monthly range in percentage terms since May 2000."

The Costa Blanca is being hit hard by the poor exchange rate. Bookings for holidays in 2009 are down and of course ex-pats living here have less money to spend each month.

To add to the misery, there are fears in some quarters that ex-pats may become the target for abuse by locals in the same way that Poles and other immigrants in the UK have. Spain, which was well known to be the most welcoming country in Europe for immigrants, may change as the economic crisis bites harder.

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