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Very profitable trade on the Dollar - we were right...

25th August 2008 | back to article listings BACK    print this article PRINT

There should be some very rich investors out there at the moment if you read my blog and email bulletin on the 30th of May this year on the dollar and why then was the time to buy US property. ( See it here )

At the time the dollar was just short of two dollars to the pound and in fact it just went over two dollars to the pound some weeks later. This was all just temporary and finally the world came to realise that the US and its pre-emptive action with the slashes to interest rates the Fed carried out means that they are going to be coming out of their economic slowdown before other parts of the world including the UK.

This means UK interest rates are likely to come down in the near future whilst US rates are likely to start going back up from their current 2%. This was all pretty obvious to be honest as long as you weren't too close to the action back in May hence my comments - but not obvious to enough people it would seem.

The dollar has now strengthened right up forcing the exchange rate down to around $1.85 to the pound. Buying power is still good over in the States but not as good as when we gave the advance warning. The good news is that lots of you took advantage of the weak dollar at that time moving capital into dollar accounts ready to purchase US assets. In my view the dollar is going to weaken in the next week or two again back to about $1.94 temporarily and at today's level or this forecast new level the pound still has plenty of buying power in the weak US market where huge rental yields can be achieved and developers are really on their back heels when negotiating deals. Holiday villas from £60,000 in Florida anyone ?

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This news story has come from the property investment blog by Stuart Law, CEO Assetz plc.

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