Question
I am in my seventies and therefore more than usually interested in capital preservation. But I am concerned about the future of the pound and would like to have some hedge against its further depreciation. US Treasuries look interesting to me, as a pretty safe stronger currency haven. Do you agree?Answer
The pound has weakened recently, seemingly due to concerns over the extent of our government debt and economic fragility. It's hard to know whether the slide will continue, but if it does then holding overseas currency may well prove profitable if you subsequently sell before the pound recovers (assuming it does).
The safest way to play the currency movements is simply to hold the currency itself. You could, for example, open a US dollar bank account. While you'd lose a little on exchange rate margins when converting, the underlying money should be safe.
Alternatively you could consider an exchange traded currency fund. ETF Securities offers a range that allow you to track movements between several popular currencies.
Buying US Treasuries is another option, but rising interest rates and/or inflation could reduce their value, so you'd need to be comfortable with this added risk.
Having said all this, unless you plan to spend a lot of money overseas in future then I'm not sure you need to worry unduly about the future of the pound. A weak pound does obviously increase the cost of imports, including fuel, but it shouldn't have too great an impact on the costs of day to day living for most of us.
I am in my seventies and therefore more than usually interested in capital preservation. But I am concerned about the future of the pound and would like to have some hedge against its further depreciation. US Treasuries look interesting to me, as a pretty safe stronger currency haven. Do you agree?Answer
The pound has weakened recently, seemingly due to concerns over the extent of our government debt and economic fragility. It's hard to know whether the slide will continue, but if it does then holding overseas currency may well prove profitable if you subsequently sell before the pound recovers (assuming it does).
The safest way to play the currency movements is simply to hold the currency itself. You could, for example, open a US dollar bank account. While you'd lose a little on exchange rate margins when converting, the underlying money should be safe.
Alternatively you could consider an exchange traded currency fund. ETF Securities offers a range that allow you to track movements between several popular currencies.
Buying US Treasuries is another option, but rising interest rates and/or inflation could reduce their value, so you'd need to be comfortable with this added risk.
Having said all this, unless you plan to spend a lot of money overseas in future then I'm not sure you need to worry unduly about the future of the pound. A weak pound does obviously increase the cost of imports, including fuel, but it shouldn't have too great an impact on the costs of day to day living for most of us.
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