Fluctuations in sterling affecting expat pensions and investment returns

Published:  14 Mar at 6 PM
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As inflation rises in most countries favoured as expat destinations, sterling fluctuations are affecting the amount of local currency in expat pockets.

Sterling is now weaker than at any time in the past year, with the threat of a triple-dip recession in the UK, economic uncertainty across the EU and the recent downgrading of the country’s credit rating all hitting hard on those transferring monthly pensions or investment income. Those transferring larger sums for medical expenses or their children’s private education could be losing thousands of pounds on exchange rates compared with last year.

Currency exchange experts are warning that the trend is set to continue through 2013, especially in the pound/euro rate. Last year, at the time of the London Olympics, £50,000 would have resulted in €6.350 more than the expected return today.

A sector for which the declining pound is good news is that of expat returnees wishing to buy into UK property. Those who’ve kept on a London property and now wish to purchase in the Home Counties are especially well-placed due to the rise in London real estate prices and the fact that their overseas salaries have been paid in local currency.

Selling a London property and converting overseas currency savings to sterling can result in a serious bonus, providing those repatriating can beat overseas investors interested in the property they’ve decided on. However, prospective expats looking to buy a home in a Eurozone country will be forced to pay more in real terms for their chosen property, as the pound now buys just €1.15.
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