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The cost of Japanese goods

While we often look at foreign currency exchange rates with our minds on our holidays and how much the food will cost us abroad (see my previous post), they affect us in other ways when we are still at home.

A strong pound can affect British businesses, impacting their export sales as their products cost more abroad and therefore fewer people buy them. The opposite, of course, is true – a strong pound makes importing foreign goods cheaper, and a weak pound makes it more expensive. With so many consumer electronics made abroad, this affects us at home.

I’ve been watching the price of camera equipment, much of which is made in Japan. A year ago, there were more than 200 Yen to the pound, which meant that buyers over here could get a good deal on lenses and the like. However, compare this graph of the cost of a Canon lens with this graph of the pound vs. the Yen. As the pound dropped as low as 122 Yen, vendors in the UK have had to increase their prices almost £100 (on that lens – more expensive products have gone up more).

As the pound gathers strength, it is climbing back up against the Yen and the cost of consumer electronics will come back down. With the country still in a recession, retailers will be competing for sales and should therefore lower their prices as soon as the rates get more favourable – passing the savings on to us! I hope so, at least – I really want that lens.

Tags: consumer electronics, electronics, Foreign Currency, foreign exchange rates, pound, yen

Holiday exchange rates

Like a lot of people, I’m keeping my eye on foreign exchange rates at the moment. Those people lucky enough to go on holiday abroad this year have been worrying about the weak pound ever since they booked the ferry! Fortunately, the pound has been getting stronger over the last few months and while it’s nowhere near the levels it was this time last year, it’s a significant improvement on 6 months ago, when it was pretty much £1 = €1.

It’s improved against the dollar, too – from $1.38 a few months ago to $1.65. Although most of us will be comparing this with the $2.00 rate that was stable for some time in 2008, it’s worth remembering that that was unusually high, and $1.70 or $1.80 is more like the standard value. Compared to this, $1.65 is not too bad.

While a strong pound is good news for holidaymakers, the British tourist industry often suffers as fewer people visit our shores, and those that do come spend less while they are here. Hopefully this summer will see an improvement on previous years as visitors from the US, the Eurozone and even Japan are all still getting a good deal on their pounds, and more natives stay at home to beat the exchange rate!

Although some people in the industry are negative, believing that economic uncertainty and unemployment will mean fewer people will be taking advantage of the tourist industry, the fact that the pound is still lower than it was last summer should pull visitors in from abroad and hopefully give the industry a shot in the arm.

Exchange rates can be monitored here.

Tags: dollar, euro, Foreign Currency, foreign exchange rates, holiday, holiday money, pound