Comments on: More on exchange rates: Winners and losers of a strong British pound http://welkerswikinomics.com/blog/2008/04/28/more-on-exchange-rates-winners-and-losers-of-a-strong-british-pound/ for students and teachers of Economics Wed, 23 May 2012 04:39:58 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: Deirdre Stenson http://welkerswikinomics.com/blog/2008/04/28/more-on-exchange-rates-winners-and-losers-of-a-strong-british-pound/comment-page-1/#comment-7188 Deirdre Stenson Wed, 17 Dec 2008 04:17:27 +0000 http://welkerswikinomics.com/blog/2007/11/06/more-on-exchange-rates-winners-and-losers-of-a-strong-pound/#comment-7188 Personally, I found this article to be both interesting and helpful. Although I cannot see many consumers closely examining different exchange rates and basing all of their actions off them, I do feel that an understanding of exchange rates can help benefit consumers in making the most economical choices. In the case of a strong British pound, as stated in the article the winners are both in the UK but also in the US, showing the wide range that can be affected by a strengthening a currency. Most interestingly, is the 'real' reactions in this situation. For example, Christina mentions the idea of British people being 'faithful' to their airline, however I wonder if this is actually the case or do they simply look for the airline with the lowest prices? Personally, I found this article to be both interesting and helpful. Although I cannot see many consumers closely examining different exchange rates and basing all of their actions off them, I do feel that an understanding of exchange rates can help benefit consumers in making the most economical choices.

In the case of a strong British pound, as stated in the article the winners are both in the UK but also in the US, showing the wide range that can be affected by a strengthening a currency.

Most interestingly, is the 'real' reactions in this situation. For example, Christina mentions the idea of British people being 'faithful' to their airline, however I wonder if this is actually the case or do they simply look for the airline with the lowest prices?

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]]> By: Christina http://welkerswikinomics.com/blog/2008/04/28/more-on-exchange-rates-winners-and-losers-of-a-strong-british-pound/comment-page-1/#comment-7171 Christina Tue, 16 Dec 2008 18:20:13 +0000 http://welkerswikinomics.com/blog/2007/11/06/more-on-exchange-rates-winners-and-losers-of-a-strong-pound/#comment-7171 Why may British airlines benefit AND lose with a stronger British pound? A stronger British pound would disadvantage British airlines as foreigners will travel less through them as their prices will seem more expensive relative to other currencies. In addition to this, tourism in Britain might decrease due to increase in relative prices (in relation to the foreigner's currency) leading to a decrease in people flying to Britain in general. In addition to this, the brits themeselves would use less of their airlines as other airlines would look cheaper in relation to the British ones. British airlines could benefit from a stronger British pound because as tourism to Britain decreases, simultaneous increase in tourism from Britain to other countries occurs, leading to more people travelling abroad, resulting to an increase in British flights. That is, if British people are "faithful" to their airlines. Why may British airlines benefit AND lose with a stronger British pound?

A stronger British pound would disadvantage British airlines as foreigners will travel less through them as their prices will seem more expensive relative to other currencies. In addition to this, tourism in Britain might decrease due to increase in relative prices (in relation to the foreigner's currency) leading to a decrease in people flying to Britain in general. In addition to this, the brits themeselves would use less of their airlines as other airlines would look cheaper in relation to the British ones.

British airlines could benefit from a stronger British pound because as tourism to Britain decreases, simultaneous increase in tourism from Britain to other countries occurs, leading to more people travelling abroad, resulting to an increase in British flights. That is, if British people are "faithful" to their airlines.

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]]> By: Livia http://welkerswikinomics.com/blog/2008/04/28/more-on-exchange-rates-winners-and-losers-of-a-strong-british-pound/comment-page-1/#comment-7098 Livia Mon, 08 Dec 2008 19:03:53 +0000 http://welkerswikinomics.com/blog/2007/11/06/more-on-exchange-rates-winners-and-losers-of-a-strong-pound/#comment-7098 As it had been stated many times above, an obvious reason why British airlines would benefit from a strengthened British pound is because now more Britons will want to travel more frequently to the states or elsewhere and therefore consume more air transport. On the other hand, if the pound has appreciated compared to other currencies like the US dollar, then American flights may seem cheaper to the British consumer and for this reason the Britons may chose other, non British, airlines. From class we learnt that as the exchange rate increases this should also benefit the consumer that not only have a wider range of products, as there was an increase in imports but also the imports will seem cheaper therefore they will be more of the product. Furthermore there will be an increased pressure on the domestic producers to keep their costs low due to the fact that the imported inputs will have decreased in price, thereby putting downward pressure on price in general i.e. inflation. Moreover domestic producer will be force to improve their efficiency in order to compete with the consumer demands of wanting cheaper imports as opposed to the more pricey domestically produced goods. Finally investors, with the appreciation of the pound, will want to invest more in England seeing as they would gain more return from it. Not mentioned in the article but can be very much damaged by an appreciated pound is the export and domestic industries. When the pound appreciates, foreign goods appear cheaper therefore imports will increase compared to exports, this can cause unemployment in the export sector. Additionally, unemployment can be caused by the lack of demand for domestically produced goods. As it had been stated many times above, an obvious reason why British airlines would benefit from a strengthened British pound is because now more Britons will want to travel more frequently to the states or elsewhere and therefore consume more air transport. On the other hand, if the pound has appreciated compared to other currencies like the US dollar, then American flights may seem cheaper to the British consumer and for this reason the Britons may chose other, non British, airlines.

From class we learnt that as the exchange rate increases this should also benefit the consumer that not only have a wider range of products, as there was an increase in imports but also the imports will seem cheaper therefore they will be more of the product. Furthermore there will be an increased pressure on the domestic producers to keep their costs low due to the fact that the imported inputs will have decreased in price, thereby putting downward pressure on price in general i.e. inflation. Moreover domestic producer will be force to improve their efficiency in order to compete with the consumer demands of wanting cheaper imports as opposed to the more pricey domestically produced goods. Finally investors, with the appreciation of the pound, will want to invest more in England seeing as they would gain more return from it.

Not mentioned in the article but can be very much damaged by an appreciated pound is the export and domestic industries. When the pound appreciates, foreign goods appear cheaper therefore imports will increase compared to exports, this can cause unemployment in the export sector. Additionally, unemployment can be caused by the lack of demand for domestically produced goods.

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]]> By: Magdalena http://welkerswikinomics.com/blog/2008/04/28/more-on-exchange-rates-winners-and-losers-of-a-strong-british-pound/comment-page-1/#comment-7097 Magdalena Mon, 08 Dec 2008 19:02:43 +0000 http://welkerswikinomics.com/blog/2007/11/06/more-on-exchange-rates-winners-and-losers-of-a-strong-pound/#comment-7097 A stronger pound would attract more consumers to travel which would benefit the airlines, however, because of the strong pound travellers are most likely going to chose non-British airlines when they travel, they would chose the airline which would be less expensive, which the wouldnt be the British one because of their strong pound. A strong pound would downward pressure on inflation, it would also lead to investors investing more in Britain. Foreign producers would also benefit since the British consumers would demand more foreign goods, and because a strong currency leads to cheaper imports. A stronger pound would attract more consumers to travel which would benefit the airlines, however, because of the strong pound travellers are most likely going to chose non-British airlines when they travel, they would chose the airline which would be less expensive, which the wouldnt be the British one because of their strong pound.

A strong pound would downward pressure on inflation, it would also lead to investors investing more in Britain.

Foreign producers would also benefit since the British consumers would demand more foreign goods, and because a strong currency leads to cheaper imports.

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]]> By: Moritz A. http://welkerswikinomics.com/blog/2008/04/28/more-on-exchange-rates-winners-and-losers-of-a-strong-british-pound/comment-page-1/#comment-6983 Moritz A. Tue, 02 Dec 2008 01:20:43 +0000 http://welkerswikinomics.com/blog/2007/11/06/more-on-exchange-rates-winners-and-losers-of-a-strong-pound/#comment-6983 British airlines will benefit from a stronger British pound because the USA has become more attractive to British consumers who will therefore book more flights to the States. However if the US Dollar has depreciated compared to the Pound, that means that flights from American airlines will appear cheaper so more British people will fly on American airlines. This would mean that the British airlines face a decrease in demand for flights. Obviously American producers will benefit from a stronger Pound because British consumers will buy more imports. American investors in Britain will also benefit from a stronger Pound. American consumers will be harmed by an appreciation of the pound because goods seem to become more expensive. British airlines will benefit from a stronger British pound because the USA has become more attractive to British consumers who will therefore book more flights to the States. However if the US Dollar has depreciated compared to the Pound, that means that flights from American airlines will appear cheaper so more British people will fly on American airlines. This would mean that the British airlines face a decrease in demand for flights.

Obviously American producers will benefit from a stronger Pound because British consumers will buy more imports. American investors in Britain will also benefit from a stronger Pound.

American consumers will be harmed by an appreciation of the pound because goods seem to become more expensive.

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]]> By: Charlie.Gao http://welkerswikinomics.com/blog/2008/04/28/more-on-exchange-rates-winners-and-losers-of-a-strong-british-pound/comment-page-1/#comment-5068 Charlie.Gao Sat, 03 May 2008 12:10:25 +0000 http://welkerswikinomics.com/blog/2007/11/06/more-on-exchange-rates-winners-and-losers-of-a-strong-pound/#comment-5068 I think in the long run, the winners of a strong British pound will eventually start losing and the losers of a strong British pound will start winning because let's face it, the pound isn't going to stay strong forever. As their currency rises, exports will decrease because goods are relatively more expensive and AD will decrease which will lead to a depreciation. I think in the long run, the winners of a strong British pound will eventually start losing and the losers of a strong British pound will start winning because let's face it, the pound isn't going to stay strong forever. As their currency rises, exports will decrease because goods are relatively more expensive and AD will decrease which will lead to a depreciation.

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]]> By: Dana Y. http://welkerswikinomics.com/blog/2008/04/28/more-on-exchange-rates-winners-and-losers-of-a-strong-british-pound/comment-page-1/#comment-5052 Dana Y. Wed, 30 Apr 2008 02:09:33 +0000 http://welkerswikinomics.com/blog/2007/11/06/more-on-exchange-rates-winners-and-losers-of-a-strong-pound/#comment-5052 1. Operating airlines is a two way business as it operates in many continents. Thus, British Airlines may benefit in U.S. airports as the cost of operating (airport taxes) is relatively lower. At the same time, British Airlines will be harmed by U.K.'s strong currency when operating in their home country: the airport taxes as well as the costs associated with food and food will be much higher. Not only that, British Airlines may have to engage in price discrimination as U.S. passengers might be unwilling to pay so much for tickets (unlike those in U.K., who although are as wary of their money, might be more accustomed to higher prices). 2. Businesses that solely operate on pounds may benefit. 1. Operating airlines is a two way business as it operates in many continents. Thus, British Airlines may benefit in U.S. airports as the cost of operating (airport taxes) is relatively lower. At the same time, British Airlines will be harmed by U.K.'s strong currency when operating in their home country: the airport taxes as well as the costs associated with food and food will be much higher. Not only that, British Airlines may have to engage in price discrimination as U.S. passengers might be unwilling to pay so much for tickets (unlike those in U.K., who although are as wary of their money, might be more accustomed to higher prices).

2. Businesses that solely operate on pounds may benefit.

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]]> By: Howard Jing http://welkerswikinomics.com/blog/2008/04/28/more-on-exchange-rates-winners-and-losers-of-a-strong-british-pound/comment-page-1/#comment-5050 Howard Jing Wed, 30 Apr 2008 00:10:55 +0000 http://welkerswikinomics.com/blog/2007/11/06/more-on-exchange-rates-winners-and-losers-of-a-strong-pound/#comment-5050 1. British airlines benefit in that more British citizens will be enticed to travel abroad with their strong pound, however other citizens such as Americans will choose not to travel to the UK due to their weaker currency. British airlines will also find it cheaper to operate in foreign countries. 2. Investors in the British pound will also benefit from its rise in value. 3. However, importers of British goods will face rising costs, so they will be harmed. 1. British airlines benefit in that more British citizens will be enticed to travel abroad with their strong pound, however other citizens such as Americans will choose not to travel to the UK due to their weaker currency. British airlines will also find it cheaper to operate in foreign countries.

2. Investors in the British pound will also benefit from its rise in value.

3. However, importers of British goods will face rising costs, so they will be harmed.

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]]> By: Annie Sung http://welkerswikinomics.com/blog/2008/04/28/more-on-exchange-rates-winners-and-losers-of-a-strong-british-pound/comment-page-1/#comment-5044 Annie Sung Tue, 29 Apr 2008 23:22:17 +0000 http://welkerswikinomics.com/blog/2007/11/06/more-on-exchange-rates-winners-and-losers-of-a-strong-pound/#comment-5044 British Airways and investors in the UK would definitely benefit with the stronger pound as the airline company would incur more profit (but may lose some customers in the process) and investors' assets will increase in value. British exports, however, would become more expensive, so countries who trade with the UK, such as the US will be hurt. British Airways and investors in the UK would definitely benefit with the stronger pound as the airline company would incur more profit (but may lose some customers in the process) and investors' assets will increase in value. British exports, however, would become more expensive, so countries who trade with the UK, such as the US will be hurt.

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]]> By: mina.song http://welkerswikinomics.com/blog/2008/04/28/more-on-exchange-rates-winners-and-losers-of-a-strong-british-pound/comment-page-1/#comment-5039 mina.song Tue, 29 Apr 2008 22:29:06 +0000 http://welkerswikinomics.com/blog/2007/11/06/more-on-exchange-rates-winners-and-losers-of-a-strong-pound/#comment-5039 I think everyone has agreed that british will benefit as value of the pound rises. But, I think it also could harm british because as the value of the pound increase, travelers to UK could decrease. And most of the british ppl will benefit by less inflation as the value of pound increase and other than british ppl, spectators and investors also could benefit from it. But ppl who imports goods from UK will harmed because relative price of same product would have increase. I think everyone has agreed that british will benefit as value of the pound rises. But, I think it also could harm british because as the value of the pound increase, travelers to UK could decrease.

And most of the british ppl will benefit by less inflation as the value of pound increase and other than british ppl, spectators and investors also could benefit from it.

But ppl who imports goods from UK will harmed because relative price of same product would have increase.

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]]> By: Julie http://welkerswikinomics.com/blog/2008/04/28/more-on-exchange-rates-winners-and-losers-of-a-strong-british-pound/comment-page-1/#comment-5036 Julie Tue, 29 Apr 2008 21:21:05 +0000 http://welkerswikinomics.com/blog/2007/11/06/more-on-exchange-rates-winners-and-losers-of-a-strong-pound/#comment-5036 1. traveling will be cheaper for the british. but more expensive for americans, there will also be less trips to britain from the us. 2. Foreign investors will benefit from the strengthening pound as well as businesses in britain who import from the US. benefits include people who consume US goods in britain. 3. Importers of british goods from the us will be harmed. 1. traveling will be cheaper for the british. but more expensive for americans, there will also be less trips to britain from the us.

2. Foreign investors will benefit from the strengthening pound as well as businesses in britain who import from the US. benefits include people who consume US goods in britain.

3. Importers of british goods from the us will be harmed.

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]]> By: Jonathan Lau http://welkerswikinomics.com/blog/2008/04/28/more-on-exchange-rates-winners-and-losers-of-a-strong-british-pound/comment-page-1/#comment-5034 Jonathan Lau Tue, 29 Apr 2008 21:13:02 +0000 http://welkerswikinomics.com/blog/2007/11/06/more-on-exchange-rates-winners-and-losers-of-a-strong-pound/#comment-5034 1. British airlines would benefit in that operating costs would be cheaper since the pound is worth more. However, British airlines would seem more expensive compared to other country's airlines, which would cause travelers to find cheaper alternatives. 2. British citizens and investors would both benefit because it would be cheaper for British citizens to buy products from other countries and investors would obviously make more from higher interest rates. 3. Foriegners would be harmed because British products would seem more expensive as compared to domestic products. In addition, British producers would also be harmed because of higher production costs. 1. British airlines would benefit in that operating costs would be cheaper since the pound is worth more. However, British airlines would seem more expensive compared to other country's airlines, which would cause travelers to find cheaper alternatives.

2. British citizens and investors would both benefit because it would be cheaper for British citizens to buy products from other countries and investors would obviously make more from higher interest rates.

3. Foriegners would be harmed because British products would seem more expensive as compared to domestic products. In addition, British producers would also be harmed because of higher production costs.

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]]> By: caleb http://welkerswikinomics.com/blog/2008/04/28/more-on-exchange-rates-winners-and-losers-of-a-strong-british-pound/comment-page-1/#comment-5033 caleb Tue, 29 Apr 2008 21:06:49 +0000 http://welkerswikinomics.com/blog/2007/11/06/more-on-exchange-rates-winners-and-losers-of-a-strong-pound/#comment-5033 1. British airlines would have more people going from Britain to the US to buy products. They would be able to get more out of their money in the US than in Britain. 2. British consumers would benefit from a more valuable pound, and exporters to the UK. 3. People in countries that want to receive British business would be hurt because the British would be seeking for more goods at a higher quality, which with a stronger pound, they can both afford more goods at a higher quality from the US. 1. British airlines would have more people going from Britain to the US to buy products. They would be able to get more out of their money in the US than in Britain.

2. British consumers would benefit from a more valuable pound, and exporters to the UK.

3. People in countries that want to receive British business would be hurt because the British would be seeking for more goods at a higher quality, which with a stronger pound, they can both afford more goods at a higher quality from the US.

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]]> By: Jessica http://welkerswikinomics.com/blog/2008/04/28/more-on-exchange-rates-winners-and-losers-of-a-strong-british-pound/comment-page-1/#comment-5027 Jessica Tue, 29 Apr 2008 20:27:42 +0000 http://welkerswikinomics.com/blog/2007/11/06/more-on-exchange-rates-winners-and-losers-of-a-strong-pound/#comment-5027 1. British airlines have both British customers and customers from other nations. It is relatively more expensive for the foreign citizens to take British airlines with a stronger pound, but it is relatively cheaper for the airline to pay its expenses, such as its repairs and its fuel costs. 2. Basically, British citizens benefit from the stronger pound because it is relatively cheaper for them to buy products from other nations. 3. People from other countries are harmed because it takes more money to buy the same good. 1. British airlines have both British customers and customers from other nations. It is relatively more expensive for the foreign citizens to take British airlines with a stronger pound, but it is relatively cheaper for the airline to pay its expenses, such as its repairs and its fuel costs.

2. Basically, British citizens benefit from the stronger pound because it is relatively cheaper for them to buy products from other nations.

3. People from other countries are harmed because it takes more money to buy the same good.

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]]> By: Jinny http://welkerswikinomics.com/blog/2008/04/28/more-on-exchange-rates-winners-and-losers-of-a-strong-british-pound/comment-page-1/#comment-5024 Jinny Tue, 29 Apr 2008 19:24:24 +0000 http://welkerswikinomics.com/blog/2007/11/06/more-on-exchange-rates-winners-and-losers-of-a-strong-pound/#comment-5024 1. Well, the benefit is that they get comparative advantage in operating the British airlines. However, the trade-off is that the strong currency might scare off customers who would turn to substitutes for Brit airlines. 2. Obviously, people who have invested in England! People with pounds and who are investing in British stocks and bonds and so on. 3. I guess foreigners will be harmed since now they have to pay more to get British products. 1. Well, the benefit is that they get comparative advantage in operating the British airlines. However, the trade-off is that the strong currency might scare off customers who would turn to substitutes for Brit airlines.

2. Obviously, people who have invested in England! People with pounds and who are investing in British stocks and bonds and so on.

3. I guess foreigners will be harmed since now they have to pay more to get British products.

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