EXCHANGE RATES !!!

[geoffmal]

I always use my Nationwide debit card at ATMs and noticed earlier this year that I was getting 3 or 4 euros more than I would have expected. How does that work ?

[emilser]

Not sure but we are always pleasantly surprised when we see our bank statement. Think it's a combination of competitive exchange rate & no surcharge/commision. It's the only method we use now, just get enough euros in the UK before we leave to get us through the first day or two of the hol (plus credit card for emergencies).

[Bruce Wallis]

Todays rate is a 12 month high of 1:16....and a tourist rate of 1:13/14
Tourist money is offering a forward tourist rate of 1:16 for July delivery.

Getting better folks

[cereza]

BW - may I ask who is offering a rate of 1-16 for July delivery and also do you have to make immediate payment in sterling ?

[jonfromdon]

Crown Currency Exchange is currently offering 1.16 for July delivery. Yes you do have to stump up sterling in advance. I have used these before and they always deliver on time. Found them via moneysavingexpert.com.

[HampshireRich]

Have to admit, I usually use the Post Office or Marks & Spencer - can't be bothered to look around too much. No commssion and the rate thereabouts will do me - 1 cent or so makes little difference - cost £1 more per 100euros. As I only take a max of 500euro I'll take the hit - if I drove to Southampton and parked it would cost more than £5 anyway.

Hope the rate reaches 1.20 to the pound by July - then I'll be £15 per 100euros better off than when my son went to Portugal last month - miserable 1.05 to the pound then.

[cereza]

[quote="jonfromdon"]Crown Currency Exchange is currently offering 1.16 for July delivery. Yes you do have to stump up sterling in advance. I have used these before and they always deliver on time. Found them via moneysavingexpert.com.[/quote]

Its a gereat rate but personally I wouldn't take the chance. Surely they must be playing the market to offer such a deal and with your pre-payment there is always a risk that the firm may not honour the currency contract if they get things wrong. I prefer to take a lower rate and feel safe but if you are happy with the risk then good luck to you.

[Bruce Wallis]

Crown Currency Exchange is currently offering 1.16 for July delivery. Yes you do have to stump up sterling in advance. I have used these before and they always deliver on time. Found them via moneysavingexpert.com.

Its a gereat rate but personally I wouldn't take the chance. Surely they must be playing the market to offer such a deal and with your pre-payment there is always a risk that the firm may not honour the currency contract if they get things wrong. I prefer to take a lower rate and feel safe but if you are happy with the risk then good luck to you.

You miss the point...you forward buy at an agreed rate. The gamble YOU take is that by the delivery date the rate hasnt climbed even higher. Therefore you are ahead of the game.
The exchange company , conversely is gambling on the fact that it WILL go higher....so they make a profit on the transaction day.

Its a very basic form of currency speculation.

[cereza]

I fully get the point and understand the idea of currency speculation however I have this aversion to paying up front for anything as I have only too often seen the disappointment that it can bring. I wish you the very best of luck in your specualtions but it's not for me under this method.

[SAM SPARKLE]

Crown Currency Exchange is currently offering 1.16 for July delivery. Yes you do have to stump up sterling in advance. I have used these before and they always deliver on time. Found them via moneysavingexpert.com.

Its a gereat rate but personally I wouldn't take the chance. Surely they must be playing the market to offer such a deal and with your pre-payment there is always a risk that the firm may not honour the currency contract if they get things wrong. I prefer to take a lower rate and feel safe but if you are happy with the risk then good luck to you.

You miss the point...you forward buy at an agreed rate. The gamble YOU take is that by the delivery date the rate hasnt climbed even higher. Therefore you are ahead of the game.
The exchange company , conversely is gambling on the fact that it WILL go higher....so they make a profit on the transaction day.

Its a very basic form of currency speculation.

Do you buy forward Bruce?

[SAM SPARKLE]

Crown Currency Exchange is currently offering 1.16 for July delivery. Yes you do have to stump up sterling in advance. I have used these before and they always deliver on time. Found them via moneysavingexpert.com.

Its a gereat rate but personally I wouldn't take the chance. Surely they must be playing the market to offer such a deal and with your pre-payment there is always a risk that the firm may not honour the currency contract if they get things wrong. I prefer to take a lower rate and feel safe but if you are happy with the risk then good luck to you.

You miss the point...you forward buy at an agreed rate. The gamble YOU take is that by the delivery date the rate hasnt climbed even higher. Therefore you are ahead of the game.
The exchange company , conversely is gambling on the fact that it WILL go higher....so they make a profit on the transaction day.

Its a very basic form of currency speculation.

The way these forward exchange companies work is not on speculation at all, let me explain.

Say Bruce buys forward one thousand pounds worth of Euros at an agreed rate of 1.16 for collection in a months time instead of buying today at a rate of 1.14, he is .02 better off, happy days.

The FX company takes his thousand pounds and invests it in the overnight Money Markets or whatever for a whole month before they have to pay it back, having earned interest on it and whether the rate goes up or down at the end of the month is of no real consequence to the company as they have made money on Bruce’s one thousand in the interim and will be able to cover any loss if the rate goes against them, in other words the FX company do not have to speculate on the forward rates, that is why the further forward you buy the better the rate offered as they will have your money for longer and ipso facto will earn more from it. Of course he will also lose out on the interest he would have earned whilst waiting for his Euros to arrive.

[EMM]

" WHAT INTEREST "

[jonfromdon]

" WHAT INTEREST "

"PRECISELY - WHAT INTEREST THESE DAYS?"

[EMM]

If the tourist rate is 1.12 and you can buy fwd at 1.16 you get a return of 3.5% much better than any bank.

The risk is that the tourist rate could be higher when you receive your euros ( We can but Dream ).

[cereza]

[quote="SAM SPARKLE

The way these forward exchange companies work is not on speculation at all, let me explain.

Say Bruce buys forward one thousand pounds worth of Euros at an agreed rate of 1.16 for collection in a months time instead of buying today at a rate of 1.14, he is .02 better off, happy days.

The FX company takes his thousand pounds and invests it in the overnight Money Markets or whatever for a whole month before they have to pay it back, having earned interest on it and whether the rate goes up or down at the end of the month is of no real consequence to the company as they have made money on Bruce’s one thousand in the interim and will be able to cover any loss if the rate goes against them, in other words the FX company do not have to speculate on the forward rates, that is why the further forward you buy the better the rate offered as they will have your money for longer and ipso facto will earn more from it. Of course he will also lose out on the interest he would have earned whilst waiting for his Euros to arrive.[/quote]

Sam
Without wishing to be rude please understand that I am fully aware of how these FX companies work - it is a very simple operation but its basis is that they take your money in advance and it is this very point which is the biggest risk of the whole operation - not their risk but yours ( or in your hypothetical example - Bruces).
As others have pointed out already current interest rates are minimal but this is irrelevant since the crux of the matter is that it would be safer for Bruce to put his own money on deposit for the 1 month period rather than entrust it to a third party. In this fashion Bruce would have the interest to offset the lower exchange rate ( although it could be higher).

It is only smaller companies who offer these forward premiums and they come with the obvious dangers. I do not know of any large banks who offer this sort of deal because they just do not have to. The question which has to be asked is how do these companies make a profit ? I believe that it can only be through speculation and if that is so then there is an inherent risk and personally I will never pre-pay money to such a risky business.
If anyone such as Bruce is happy to take the risk then good luck to them and I hope it continues to work well for them.