Sterling to AED
 

I need some advice on making payments for the flat i bought in Dubai. As the payments are due in the next 2 years, i was thinking of converting at least 75% of my purchase price to AED now to avoid any future drop in the ER.

It seems to me that the current ER (sterling vs AED) is probably the best and the rumors are strife that AED is under immense pressure to be reevaluated or un-pegged against USD.:confused:

Under the current circumstances would it not be sensible to convert your sterling in the AED to protect yourself from sudden ER drop?

I would appreciate your thoughts.
cheers

As the Dirham is tied to the US dollar, it depends on whether you think the greenback will dive any further. That's a job for the men in the funny waistcoats, but my personal feeling is it hasn't bottomed yet.

The only joker in the pack is that there is pressure (so far being resisted) to revalue the dirham. It may happen, but probably not until next year at the earliest.

beyond that, your crystal ball is as good as mine!

You could always approach currency traders to hedge funds at a fixed rate. Keep your Sterling in a high (relative to AED/USD) interest bearing account and budget more accurately for future payments. The rates offered and willingness to do this may give a useful insight into the professional opinion on a revaluation of the AED in the near term.

Maybe you should look at an early payment of the balance for the flat. If you are short 25% of the outstanding you could choose to take a short term loan for that amount in the currency you are earning at this time.

You could see a reduction in the total amount of payment and eliminate the currency risk on the balance if your income is not AED.

@ Oceanic
I approached a currency traders & he quoted me £1 to AED 7.37 now and if i buy a 'future contract' (oct 2009) then guaranteed rate would be £1 to AED 7.15.

@ michael.e
Early payments would not give me any advantage, if anything i could lose potential interest on the early payments.

@ Wizofoz
Well at least you agree that reevaluation will make the AED stronger against $/£. But the crystal ball suggest that you can minimize your potential loss by buying a 'future contract' now? What do you think?

noticed a small but sudden drop/gain in the exchange rate today!
£1 = 7.43 today, on Friday it was £1 = 7.51

I sent some money home yesterday, AED-£ and the exchange rate was pitiful, 7.668 to the pound.

yeah i know mate, it would be nice to know/read some sort of future exchange rate forecast from someone with financial knowledge! :hmm: