I am interested in investing in America. Should I fix my exchange rate now, or wait in case the market improves even more? And should I be looking anywhere else to invest in order to take advantage of the weak dollar?

LK, London

I guarantee that the market will improve further, so why risk waiting for an incremental rise only to see it fall sharply because of a one-off incident? Most economists forecast that the pound will continue to trade above $2 for the rest of the year; you should be able to fix a spot contract for the next 12 months, if not two years, for a rate on or above $2. But you won’t be able to get such a good rate with a Time Option Forward contract.

If you want to take advantage of the favourable exchange rate, remember that the currencies of several other countries are “pegged” to the US dollar, which makes them attractive to investors. There are eight countries, including Grenada and St Lucia, that use the Eastern Caribbean dollar (XCD), which is fixed at 1US$ = 2.7XCD; Dubai, where 1US$ = 3.6725 dirham, is also worth looking at; and the Bahamas, Belize and the Cayman Islands also have a fixed rate with the greenback. Canada is different: its dollar is independent of America and faring much better than its neighbour.

William Collins is a senior dealer at Baydonhill, a foreign-exchange company; www.baydonhill.com

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