A couple of days ago I was shocked to discover that the RM/ Sterling exchange rate is now RM 5.13 from RM 7 about a year ago. That's a fall of about 30% for the Pound. I havent a clue on whether it will recover from here or simply keep on getting lower. Currencies are really not my field of expertise (to put it mildly). The only thing that sticks out in my mind is that The Economist's Big Mac Index (yes, funny huh) has long suggested that the pound was one of the world's most overvalued currencies. I have no confidence in the reliability of burger prices to forecast currency movements, but I suppose recent events have shown that the Big Mac Index may have something going for it after all.
The ongoing currency and budget catastrophe engulfing Iceland really astounds me. The Wall Street Journal has an interesting video about it at http://online.wsj.com/video/how-iceland-collapsed/F7F0A5B0-EF8C-425C-96D0-6579D5955AFD.html . Getting back to the subject at hand, here's an essay on how the UK has a small possibility of undergoing a similar disaster: http://blogs.ft.com/maverecon/2008/11/how-likely-is-a-sterling-crisis-or-is-london-really-reykjavik-on-thames/#more-359. Basically the writer feels that Britain is also highly leveraged (albeit not as badly as Iceland) and could also suffer a similar currency and financial crisis.
I will be honest enough to say that I am not educated enough on the subject to make any of my own pronouncements on the matter.
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