Should I freeze my dollar wages at one rate?

Q I work as a part-time contractor for an American consultancy and get paid in US dollars. When I started with them last August, the rate to the pound was $1.82. The rate as I write is $1.91.

This effectively means that I have had a wage decrease. My employer has offered to peg my monthly wages at the current rate of $1.91.

Should I take up their offer or hope that the rate moves back down in the short term?

ML

A lot of people in the UK on dollar-based salaries are suffering at present, although, of course, they did very well in the past when the pound was in decline. The deal offered by your employer looks attractive in the short-term.

Most pundits are forecasting that the dollar will move even lower, to over $2 to the pound, and remain weak for many years because of the US's huge balance of payments deficit that shows no sign of improving.

However past experience shows that when things look blackest, it is the time to buy. Currency markets are extremely volatile. A series of interest rate increases may well boost the dollar.

There is also the question of whether the pound will hold up if the chancellor's huge public spending programme proves unbearable. Personally, and it is a personal view, l would be happy with the deal offered by your employer but only for a limited short-term period.