Jun 2010 Financial News

Declining pound might cause us to lose UK visitors

Jun 15, 2010

A local commercial banker believes that the worst case scenario for Barbados from the falling British pound sterling, could be a decline in UK visitors to this country.

Rolf Philips, Manager of Retail Banking at First Caribbean International Bank (FCIB), has said so during a brief interview with the Barbados Advocate on the decline in the value of the pound sterling.

Sterling has lost considerable ground vis-a-vis the US dollar on account of the hardening economic conditions in the country, although some analysts there are suggesting that the UK has seen the worst and that the situation will improve later this year.

Last year the pound was being exchanged in Barbados for well over Bds$3.20.

However, up to yesterday, the rate charged was Bds$2.84. International market watchers are suggesting that with the Bank of England likely to raise interest rates the action will give some support to the flagging currency.
Philips pointed out that Barbados has a strong relationship with the UK in terms of tourism and the purchase of properties here on the island.

“If a fall in currency in the UK makes people feel less wealthy then it means they might be less likely to take a holiday,” he said.

“So if they are exchanging their pounds for less Barbados dollars then they may have to make a decision on whether they can afford to take a holiday or not,” said Philips.

“So that this the worst you will see for Barbados,” according to the FCIB official.

He said that the behaviour of the pound sterling in relation to other countries would be based primarily on what is happening in the UK economy.
Any strengthening of the pound would also be good news for hoteliers and those Barbadians whose pensions from the UK are denominated in sterling.
Although visitor arrivals from the UK are because of the deepening recession, that market has still remained the number for this country. It accounts for about 40 per cent of long stay arrivals to Barbados. Spending per day by UK visitors is also higher than visitors from other markets.

In addition, having for the past six months or so witnessed a decline in the exchange rate for the pound, those on UK pensions will be pleased to know that some analysts are saying that decline in the UK currency has bottomed out and it could be trading above the US$1.46.


Source:
Barbados Advocate
Tuesday June 15, 2010

http://www.barbadosadvocate.com/newsitem.asp?more=business&NewsID=10848