# Currency Question



## plaq (Mar 13, 2008)

I will be on an expat package (coming from the UK) and I have the option to have some or all of my salary paid in a different currency - GBP, Euro, US$ but not Dirham. I am assuming that since the dirham is pegged to the US$, it would be sensible to be paid in whichever currency is strongest against the $, while having just enough of my salary paid in GBP to cover my expenses back in the UK.

However, I'm not really sure which currency to choose, or whether it really matters all that much. Any advice much appreciated.


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## Iron Horse (Apr 10, 2008)

Stay with the Pound Sterling. It's your best for conversion right now. The US Dollar in my opinion is still going to take a beating in the near future.


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## TheFiveJs (Mar 26, 2008)

The fed is supposed to cut rates again which we all know increases inflation some more. I'd get anything except the dollar.


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## cairogal (Aug 11, 2007)

Can't wait to get that $1200 check and pay some bills down. So much for stimulating the economy.


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## Iron Horse (Apr 10, 2008)

cairogal said:


> Can't wait to get that $1200 check and pay some bills down. So much for stimulating the economy.


I'm only getting the $600, but I'll stimulate the economy here in Dubai!


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## McBook (Apr 7, 2008)

TheFiveJs said:


> The fed is supposed to cut rates again which we all know increases inflation some more. I'd get anything except the dollar.


I recommend you invest in dot-com shares, housing and maybe the East India company too! 

When everyone says do one thing, it's usually the right time to do another.

I say take risk out of the equation and get paid in Dollars. I may be wrong but at least you can't lose money doing it this way (unless they abandon the peg, which doesn't seem likely).


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## Iron Horse (Apr 10, 2008)

McBook said:


> I recommend you invest in dot-com shares, housing and maybe the East India company too!
> 
> When everyone says do one thing, it's usually the right time to do another.
> 
> I say take risk out of the equation and get paid in Dollars. I may be wrong but at least you can't lose money doing it this way (unless they abandon the peg, which doesn't seem likely).


I was worried a bit a few weeks ago, but when the government announced they would keep the Dirham pegged to the US Dollar I did breathe a little sigh of relief. But you can lose money by being paid in US Dollars. Get paid in Pound Sterling and convert it to Dirhams and you'll have more money in your pocket than converting US Dollars to Dirhams.


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## plaq (Mar 13, 2008)

Iron Horse said:


> I was worried a bit a few weeks ago, but when the government announced they would keep the Dirham pegged to the US Dollar I did breathe a little sigh of relief. But you can lose money by being paid in US Dollars. Get paid in Pound Sterling and convert it to Dirhams and you'll have more money in your pocket than converting US Dollars to Dirhams.


That sounds like sense, cheers.


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## McBook (Apr 7, 2008)

Iron Horse said:


> I was worried a bit a few weeks ago, but when the government announced they would keep the Dirham pegged to the US Dollar I did breathe a little sigh of relief. But you can lose money by being paid in US Dollars. Get paid in Pound Sterling and convert it to Dirhams and you'll have more money in your pocket than converting US Dollars to Dirhams.


Obviously if you get paid £100,000 that's more than $100,000 but i doubt that is what's going to happen here. 

My point was that if you decide to get paid in Streling, you are effectively making a bet that the dollar/dirham will continue to depreciate against Sterling. This is risky, although it might pay off. 

However, if you get paid in USD, there is absolutely *no risk *of the real value of your salary decreasing as a result of exchange rate movements.

haha, this reminds me of economics lectures!


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## Iron Horse (Apr 10, 2008)

McBook said:


> Obviously if you get paid £100,000 that's more than $100,000 but i doubt that is what's going to happen here.
> 
> My point was that if you decide to get paid in Streling, you are effectively making a bet that the dollar/dirham will continue to depreciate against Sterling. This is risky, although it might pay off.
> 
> However, if you get paid in USD, there is absolutely *no risk *of the real value of your salary decreasing as a result of exchange rate movements.


Even if one is getting paid £60,000 it's better than $100,000 right now, and I suspect this is happening here which is how I based my recommendation to stay with the Pound Sterling. The exchange rate is what, $2:1£? (just asking, not making a statement).

I don't see the US Dollar making a strong comeback for another six years (my gut feel), so using the advantage of the Sterling's rate for currency conversion to the Dirham works until the US Dollar is stronger.

The risk and loss for plaq and others here from the UK with being paid in US Dollars is that they will one day return home. They get nailed when they have to convert back to the Pound Sterling in the exchange as the US Dollar isn't as strong. This is the reason why many Brits, and Europeans on the Euro, are finding holidays in the USA easy right now as their money goes far, and why many Americans find it painful to visit the UK and Europe.

If I, as a yank, could be paid in Pounds or Euros I'd be all over it.


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## dubailocal (May 1, 2008)

If you are from UK you will need to discuss your salary well, consider that UAE will refer to USD not pounds.


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## McBook (Apr 7, 2008)

Iron Horse said:


> The risk and loss for plaq and others here from the UK with being paid in US Dollars is that they will one day return home. They get nailed when they have to convert back to the Pound Sterling in the exchange as the US Dollar isn't as strong. This is the reason why many Brits, and Europeans on the Euro, are finding holidays in the USA easy right now as their money goes far, and why many Americans find it painful to visit the UK and Europe.
> 
> If I, as a yank, could be paid in Pounds or Euros I'd be all over it.


Horse, you couldn't be more right with your point about returning home - the sooner you intend to return home, the more sense it makes to get paid in your home currency. Suppose that raises the question of how long plaq intends to stay in the UAE. It would also be interesting to know how the starting salary will be worked out - i would imagine that market exchange rates would be used i.e. initially the value of plaq's salary will be the same no matter what currency he gets paid in (im making assumptions here).

At the end of the day, plaq needs to bet one way or the other. All i'd say is beware when something looks like too good a deal i.e. the USD/GBP exchange rate at the moment! 

Plaq, if your gonna be in Dubai for a year, Sterling is probably the safe bet but if your staying any longer you run a very real risk that your cost of living will be increasing while the real value of your salary will be decreasing. 

Anyway, me and Horse have probably provided at least $1000 worth of advice here, lol... there's no right or wrong here , not without hindsight anway! hope it works out for you whatever you do


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## Iron Horse (Apr 10, 2008)

McBook said:


> Anyway, me and Horse have probably provided at least $1000 worth of advice here, lol... there's no right or wrong here , not without hindsight anway! hope it works out for you whatever you do


I'm a very inexpensive financial consultant. A few beverages and I'm covered.


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## Elphaba (Jan 24, 2008)

Iron Horse said:


> I'm a very inexpensive financial consultant. A few beverages and I'm covered.




I think the word you are looking for is cheap....


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## Iron Horse (Apr 10, 2008)

Elphaba said:


> I think the word you are looking for is cheap....


No no no, I'm sure inexpensive is the correct word. The payback is crushing me!


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## Elphaba (Jan 24, 2008)

You know I jest. Anyway your generosity (& that of Equus) was noted & much appreciated. x


_


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## plaq (Mar 13, 2008)

Thanks for all the thoughts, pro bono it seems. I have a 2 year contract in Dubai, but as you guys suggest, its a bet one way or another so I'll stick with GBP and hope the US economy continues to plummet....


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## Santa (Mar 19, 2008)

Hi All,

If my salary and allowances are all being paid in AED and I'll probably go back to either Canada or Hong Kong after my assignment, what you think will be the most appropriate currency for my savings ? Thanks


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## Iron Horse (Apr 10, 2008)

Santa said:


> Hi All,
> 
> If my salary and allowances are all being paid in AED and I'll probably go back to either Canada or Hong Kong after my assignment, what you think will be the most appropriate currency for my savings ? Thanks


How long are you here for? I'd say stay with the AED. While the government stated a month or so ago they would continue to peg the Dirham to the US Dollar, one never knows if things will change. Recent news about a slight improvement in the US economy is smoke and mirrors and shouldn't be believed. If you hold the AED's and they peg it to the Euro or Pound Sterling you could instantly double your money. If you are going to be around here for at least ten years I still say hold the AED's because the US economy will be turning by then. 

I can ramble on about my ideas and theory regarding the US economy, but it's better served during the next meet with a shot of tequila.  This way you can dismiss me as a nutter or believe what I say holds some validity.


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## Santa (Mar 19, 2008)

Thanks Iron Horse.

I haven't arrived yet and will probably land by this Aug/Sep. Hope to meet you to discuss the issue upon my arrival.

My company had been awarded with a contract of 12 yrs in Dubai, I think I will at least stay 3-5 yrs here. So, if the government decided to unpeg with US currency, the AED should get a rapid rise in the currency market, right ? Pls allow me to ask this stupid questions as I'm not good in economic.


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## Iron Horse (Apr 10, 2008)

Santa said:


> Thanks Iron Horse.
> 
> I haven't arrived yet and will probably land by this Aug/Sep. Hope to meet you to discuss the issue upon my arrival.
> 
> My company had been awarded with a contract of 12 yrs in Dubai, I think I will at least stay 3-5 yrs here. So, if the government decided to unpeg with US currency, the AED should get a rapid rise in the currency market, right ? Pls allow me to ask this stupid questions as I'm not good in economic.


It's difficult to say what would happen exactly if the Dirham was to be pegged to say the Euro or Pound. I could fantasize about some wild scenarios, but I'm not a true financial guru although I'm not the worst either.

I think the US will be in for a turnaround in that time. It'll take some different elected government types, a little more sacrifice from the people, and businesses to change the mentalities they have towards their employees where the CEO makes 450 times what the average employee makes. I'll be here, so when you arrive we'll knock a few down, discuss finances, pack a parachute and jump from the plane at 3000meters.


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