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Currency War Report: Guide To Currency Expectations 2011 For Expats And Investors

In this guide Ray Clancy, editor, looks at some strategies for coping with what lies ahead in 2011 and consults a panel of experts and explains why what happens in Brasilia, Beijing and Washington is just as important as the markets in London, Paris and Frankfurt.

With Ireland now in bailout territory and the markets jittery about countries like Portugal and Spain the euro has been losing ground. The eurozone's sluggish competitiveness is a threat to the European Monetary System and could impact on wider global recovery and other currencies, including those in emerging markets.

"What happens with currencies in the next few months is of concern both to investors and expats who move money frequently. So what has gone wrong in euroland?..."

"Finance ministers point out that there are several main elements to the problems facing global currencies right now, two of them fairly new...China's policy of managing its currency and limiting its movement against the US dollar has spread out..."

"currency movements will affect both investors and expats who need to adopt a strategy if they want to lessen their risk and potential losses in the coming year...

"2011 will be a very turbulent place for all, especially the eurozone where the spectre of more bailouts will keep the markets jittery..."

Currency war: myth or reality?

'We're in the midst of an international currency war. This threatens us because it takes away our competitiveness,'
Mantega tells world leaders in September.

"during the financial crisis, China went back to keeping the yuan from rising. The US accused China of manipulating its currency to gain an unfair advantage..."

"volatility expected in 2011...'The last time there was a series of competitive devaluations it ended in World War Two'..."

"Brazil's currency, the Real, has increased 39% against the dollar...Brazilian industrial exports are said to be hurt..."

"Some are even predicting the end of the euro...German Chancellor Angela Merkel and French President Nicolas Sarkozy firmly believe that the future of the euro is the future of the EU and if the euro fails then Europe fails..."

Forward planning needed for 2011

John Paul Georgiou,senior foreign exchange broker with Voltrex Foreign Exchange (VFX) in London gives an idea of what you need to know to get as much from your money as possible.

Expats should lock in their capital to avoid volatility, while investors should look for higher returns in 2011

"Expats often need to move currency frequently, especially those who have income in one country and live in another. The main piece of advice coming from currency experts looking ahead is to consider locking into a contract for the next 12 months..."

"For example, an expat earning an income in Sterling, but living in either South Africa or Australia, will have seen the purchasing power of Sterling decrease by around 12.7% and 10.8% over the last 12 months respectively..."

Expert view

"Without doubt, the Euro's saving grace is currently Germany. However, should economic conditions deteriorate for this nation then Euro exchange rates towards €1.30(0.769) against the Pound and jumi.20 against the US Dollar could occur..."

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2 Currency Wars Special, introduction
3 What is a currency war?
4 Risk strategies 2011 by John Paul Georgiou, senior foreign exchange broker with Voltrex Foreign Exchange
5 Currency matters for expats and investors
6 Advice from the Investment International panel of currency experts

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