Why are we on the verge of a $2.00 £...

  Z1100 23:47 06 Dec 06
Locked

and is that a good thing (notwithstanding the obvious benefit to the British consumer) overall?

Hanx!
K.

  WhiteTruckMan 23:51 06 Dec 06

is measured in US dollars, for historical reasons lying in a typically stupid decision made by a previous UK government.

Anyway, this should mean that our pound will buy more fuel, but good old boy gordon has already taken steps to circumvent that...

WTM

  Kate B 00:11 07 Dec 06

Actually, while it's great if you're going to the US to have such a strong pound, it's not so good for the economy. Too strong a pound means that our goods and services are expensive for the rest of the world - we're not competitive.

WTM, why was it "stupid" for oil to be priced in dollars?

  Vangeliska 00:11 07 Dec 06

don't hold your breath waiting for the price of petrol to come down.

  Z1100 00:19 07 Dec 06

That was my worry.

Not that I could articulate it but I knew somewhere inside me that a $2.00 £ is not going to be good unless you are shopping for Christmas. It will be interesting to see what else crops up.

Hanx!
K.

  WhiteTruckMan 00:28 07 Dec 06

Because in volentarily allowing the price of a commodity vital to any industrialised society to be valued in a foreign currency, you surrender in part some control of your own economy to the volatile fluctuations of someone elses economy.

I think the decision to relinquish this control goes back to the Eden government, but before everyone jumps at me, I fully admit that my memory may be faulty in this detail.

BTW, still up to your neck in it?

WTM

  Vangeliska 00:28 07 Dec 06

I thought we were talking about a weak Dollar, not a strong Pound.

  Kate B 00:29 07 Dec 06

In the immediate term it's bad for the US economy: Americans have to pay more for imported goods, which fuels inflation - which in turn encourages the Fed to raise interest rates.

On a global scale, it's bad for other economies as well. Many Asian economies are dependent on the dollar: their governments tend to hold foreign reserves in dollars and if the dollar is weak by definition their reserves are worth less. Under normal circumstances, if the value of an asset you hold is falling, you sell it - but that drives its value down further, so in theory the dollar could still fall lower if other countries start selling their reserves.

  Kate B 00:32 07 Dec 06

WTM, we don't produce oil in the UK, so we don't have a say in its price: that's set by the oil-producing cartel, Opec. We're just consumers of it, though obviously the price of oil affects our economy as it feeds into the cost of living and therefore the inflation rate.

My workload isn't quite as mad this week, thanks for asking! ;)

  Vangeliska 00:35 07 Dec 06

I guess North Sea Oil has dried up.

  WhiteTruckMan 00:37 07 Dec 06

You are of course correct, but I would like to point out that when we surrendered the pricing of oil to the americans it was very much pre-opec days.

Lucky you on the workload. Me, I'm busier than a wringer out for a one armed window cleaner. And its only going to get worse as the month goes on <g>

WTM

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