Euro vs. US Dollar

Nov 9th, 2008, 01:47 PM
Join Date: Oct 2005
Posts: 63,503
Percy: Me thinks you are just blowing smoke (or perhaps inhaling a bit too much)

"And don't say, every one pays a premiun ,because a lot of people do not !" Major traders might not - but regular, run-of-the-mill customers almost always do. Care to give us an example of the exchange you received on any particular date? One can say they don't pay a premium - but the numbers generally prove otherwise.
janisj is online now  
Nov 9th, 2008, 01:54 PM
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She would know, Percy.
travelme is offline  
Nov 9th, 2008, 02:21 PM
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It seems most sensible to forget about buying euros in the U.S. and just use my debit card as much as possible.

The most economical strategy seems to be that I should get the largest amount of money allowable at one time from the ATM and pay cash whenever I can. To draw $500 costs me $5.00, whereas to charge $500 (in hotel costs, for instance) costs 3%, or $15. In addition, some hotels give a discount for cash, so I may save some by using it.

The downside is that using my credit card earns miles, and I am able to get free flights every couple of years.

Pegontheroad is offline  
Nov 9th, 2008, 05:03 PM
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Your dead set to think that you and I would pay the same premium for buying the same currency.

I am talking about me and my bank.

If you and I walked into MY bank tomorrow, then what I am saying is that I would get a way better rate for buying euros than you ever would.

Do you think that everyone on a flight from your city to say ,London have all paid the same rate for the flight.?

Why have some people got a better rate than other?

There are many reasons and I am sure you would know some of them.

How do you know my father, sister or brother is not the District Bank Manager.

Do you still think you and I would gethe same rate. Or do you think that just maybe I would get a better rate.

I know what the going exchange rate is on any given day.

and I know the exchange rate I get and I can assure you it is much better than the going rate that John Q Public gets.

And just to be fair...there are others that I know that get even a better rate....but I cannot quibble about that, because due to their job position they are entitled to a better rate that the public is not prevy to.!

But if you are happy thinking that I do not know what I am talking about ...or that it is not possible for me to get a "Special Rate" ( better than the regular customers that come into the bank I deal with )..then good ...what ever pleases you and make you comfortable.

I am not hear to argue or to take the position that I am someone special is just that my connections allow me certain privileges with my bank....not your bank, my bank.

Happy Banking
Percy is offline  
Nov 9th, 2008, 05:52 PM
Join Date: Sep 2003
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What happens when you lose that "couple of thousand"? It's gone.

Cash of any type is the worst thing to carry around since once it's gone, it's gone.

When someone breaks into Percy's home and takes the Euros they are gone. At least in the US cash losses are limited to a few hundred dollars without "proof" (and since it's cash, good luck finding "proof" you had it)

Personally I do have to pay an ATM fee everynow and then. I don't get hysterical trying to get around it. My bank does have some banks where I don't get charged and I try to use them if possible. But if $5 is too much to pay then perhaps I should rethink the whole plan.
CarolA is offline  
Nov 9th, 2008, 06:25 PM
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I do not take $2000.00 worth of euros with me on a trip !

I do have about that amount in a cash box at home.

I am not worried about someone breaking into my home and stealing it.

On a trip ,I try to gage how much cash I will need...then take that amount and use Visa and Mastercard everyplace I can.

I spent a the month of August touring France ,Switzerland and Germany.

I took $600.00 of euros with me..used my Visa and Mastercard every place I could and came home with euros yet !

Even having a beer at a sidewalk cafe in Geneva , I used my Visa!

Your right ,if someone breaks into my house and finds the euros and steals it....I am out of luck !

It is something I do not worry about, I think my security at home gives me an adequate peace of mind.

Good Night
Percy is offline  
Nov 9th, 2008, 08:32 PM
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Percy, since you obviously have some sort of "status" that requires a super-classified, decoder ring, secret handshake to get decent rates - it's hardly useful to tell other how great it is to buy € at their banks.

After all, you made it clear that others don't merit that exalted status and don't get the same perks. :-"
janisj is online now  
Nov 10th, 2008, 02:17 AM
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OOh!I think Janis is a bit envious of you Percy. Its probably gnawing at her and keeping her awake. Hope she doesnt take it out on her poor dog.
travelme is offline  
Nov 10th, 2008, 03:58 AM
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The vast majority of Americans, who do not have some sort of "special" relationship with their bank, will pay a lot more for euros here in the USA than they would by using their ATM card at bank ATMs in Europe.

We pay no fees for our bank account here in the USA (PNC bank). Our bank does not charge us a per transaction fee for using any ATM anywhere in the world. We pay only the standard 1% fee when we make an ATM withdrawal (same with our USAA credit card when we make credit card purchases). This is much less than we would pay buying euros anywhere in the USA, including online.

Again, we don't have a relative working in our bank who gets us a special rate or some other "special" bank relationship that results in giving us some "super secret special" exchange rate with the bank losing money on the deal.
RufusTFirefly is offline  
Nov 10th, 2008, 03:22 PM
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That a banking system is evaluated as poorly run does not mean that every bank in that system is poorly run, and even a bank evaluated as poorly run (perhaps due to involvement in the sub-prime loan field) could have other departments, such as credit cards, that are well run. So to find a good bank for a tourist, you need to ferret out information on how they handle currency transfers, and debit and credit cards, and unfortunately, few people at the bank can give you that information with any degree of accuracy.

Not all banks have the same policies and procedures, and any given bank may treat customers differently. If you are a teacher, for example, do not expect to get the same breaks from the bank as an executive at a large client, or even as a bank employee, or a politician.

The most commonly used ATM networks are run by Mastercard and Visa, and my understanding is that they impose a charge of approximately 1% on every ATM withdrawal, as well as on any purchase using their credit card.

I've read that one American bank covers this fee themselves, while all others, including credit unions, pass it on to the customer; some banks (but I've heard no credit unions) add to this fee, often making it 3%, and may or may not have a further fee for using an ATM that the bank does not own.

Few people go to the trouble of finding out just what the charges will be, and many don't think it is worth the effort to change to a bank that offers better fees. Note that if you spend $10000, excluding airfare, on a visit in Europe, lowering you financing costs by 2% will save you only $200.

My guess is that Pegontheroad will pay $5 plus the 1% network exchange fee for each ATM withdrawal, and would pay 3% for paying the same bill with a credit card, but will give up the miles she would have earned by using the credit card. It's possible that she could negotiate a lower price with the merchant with the cash (merechants also pay the credit card companies a percentage for the privilege of letting you use your credit card).

If the miles are that important to you, find a bank with lower credit card and ATM fees that also offers miles.

As to buying some euros, some people enjoy some emotional comfort from carrying some euro on the flight over, but they pay for that in higher exchange fees (but on %100, we are not talking big bucks). If you have no debt and have money in savings, you could withdraw from savings, losing some interest, and buy euros (but probably at a far worse exchange rate than if you got them at an ATM in Europe) and hope that the euro goes up, rather than down. You might also want to sacrifice a chicken. If you have some debt (as do most of us) a better financial plan would be to pay down the debt (such as 20% debt on some credit cards) and take your chances on the way the exchange rate will go.

If you are a knowledgeable investor you could buy a futures contract and minimize your risk, but even knowledgeable investors sometimes get burned.
clevelandbrown is offline  
Nov 10th, 2008, 04:37 PM
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clevelandbrown - Is there a relatively easy and cheap way for individual investors here in the US to buy forex futures?

If there is, then one can hedge against currency fluctuation for trips in the future.
rkkwan is offline  
Nov 10th, 2008, 06:48 PM
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I had an account with a full service broker and they offered the option; I don't know if the discount brokers that so many people now use offer it.

I don't recommend that people do it. As I recall the contracts were in units of 10,000 and were not too expensive, but demanded constant monitoring and the nerve of a gambler. You have to be willing to lose your entire investment in minutes, and I would think it would be worse now with the instability in the financial markets.

I'm sorry I can't give more current information. I stopped investing in volatile instruments, including even individual stocks, when I no longer had the time to do extensive research and constantly monitor my investments; I now let mutual fund managers lose my money for me.
clevelandbrown is offline  
Nov 10th, 2008, 07:11 PM
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Good advice clevelandbrown and well put.

Yes I agree janisj seems to have a burr under her saddle.!!

Personally I cold care less if her bank gave her euros for free.

We all have someone or know someone and through them we get certain breaks.

When I first read this thread I misunderstood when someone said they paid $5.00 to draw money out of their account.
They were talking about an ATM and I thought they were taking it out of their person. (gulp)

I wish I knew someone in the airlines business..because friends of mine who have a family member working for the airlines gets perks that are not available to me.

But that's okay,it all evens out in life somewhere along the road.
Good Night

Percy is offline  
Nov 10th, 2008, 09:44 PM
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Is there a relatively easy and cheap way for individual investors here in the US to buy forex futures?

Define easy... I've fiddled around with the practice version of the trading platform at Oanda, and found it easy enough to use from a technical standpoint.

I still wouldn't get into the fx market as an amateur, though, because it is easy to lose money, too. But, if your only goal was to hedge a relatively small amount for your vacation, then it wouldn't be that hard.

My issue is that I don't see the need to hedge for a vacation. I mean, just how much are you spending? And are you forgoing another investment, one that is part of your broader strategy to do it? Maybe if you spend a lot of time and a lot of money in Europe each year (such as owning a home and living part-time), then you might have some need to hedge, but it seems kind of beside the point to hedge for a 3-week vacation.
travelgourmet is online now  
Nov 10th, 2008, 10:19 PM
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travelgourmet - I totally agree with you, and I definitely won't do it myself. I can take a chance, and exchange rate difference won't really affect how I'm to travel anyways.

I asked mostly for curiosity. But also because some people may be on such a tight budget that they can afford to go to the UK at 1GBP = $1.6, but can't afford to do at all at $2. (Just an example). So, while they may lose on on the hedge if the GBP falls further; they also can guarantee themselves a trip.
rkkwan is offline  
Nov 11th, 2008, 01:47 AM
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Once you ask yourself the question: will I buy Euros now, or will I wait, then you have become a speculator. So, cwojo99, you are speculating.

The professional speculators cannot tell you the way things will go (although they can sometimes spot an unsustainable government or central bank policy and trade against it). The price for spot or forward trades already reflects market opinion on the relative values of currencies. This opinion is the consensus of tens or hundreds of thousands of "experts", all of whom might make different judgements and back their judgements with large amounts of money, and the consensus is the price level emerges from those trades.

Your $2000 or $5000 holiday fund is a snowflake in a blizzard, and you have about the same chance of predicting where it will end up.
Padraig is offline  
Nov 11th, 2008, 08:28 AM
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Look, if you're going to gamble, at least do it in a more glamourous place than the staid surrounds of your bank's forex desk. Go to the casinos of Monte Carlo, or Baden-Baden. I'm not sure about MC, but B-B has a dress code, making it easier to imagine you are at the tables with James Bond. You will also be more likely to remain aware that what you are doing is gambling - always a good thing. Unlike the brokerage/bank mutual fund office, nobody hands out pretty brochures, or uses such soothing-sounding talk as "you're investing in the long term in the craps tables" etc. etc.

By the way, this same issue was raised only a few months ago, by someone who decided that the euro would continue to rise against the dollar, and so bought euro in advance.

I hope they enjoyed the thrill of the chase of their little endeavour, because if their trip was slated for sometime in October, then the expected fruits, needless to say, failed to materialize. But hey, who am I to tell anyone not to gamble? I hold mutual funds (which of late feel like diving weights.)
Sue_xx_yy is online now  
Nov 11th, 2008, 09:23 AM
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It is not like gambling if you're buying euro in advance for a trip you're going to take, because you will be spending those euros in a few months.

It's a form of insurance or hedge. Will it always come up on top? Of course, NOT, as euro can fall further. But you also protect yourself against the euro going higher and making your trip more expensive (in USD) than it is now.

Now, if you buy MORE euro than you'll be spending for your trip, then it's a gamble.
rkkwan is offline  
Nov 11th, 2008, 12:00 PM
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Wells Fargo:

135.44 with a 8.00 charge to ship.

3000.00 = 2215 euro
TravelingMan61 is offline  
Nov 11th, 2008, 12:15 PM
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rkkwan, I didn't intend for my argument to be taken quite so seriously! But since you have, I must concede that to the extent that one will still retain at least the spending value of the euro regardless of the cost of purchase of same, buying euro in advance doesn't equate to placing bets on a roulette wheel, where one would lose everything.

However, I think much depends on whether one recognizes as gambling only those situations in which there is high risk of losing everything. In my view, this definition of gambling is too strict. Risk alone, in my view, doesn't qualify gambling. Rather, gambling is what one does when one takes a particular action with no well thought-out rational grounds to support said action. We might like to think our decision to buy euro in advance (or stocks for that matter) is founded on rational grounds, but given how little information we generally have available to us (and the recent crisis has shown just how much information is missing to the average person) our decision is based more on hope than on informed experience. Thus, even if the stakes are relatively small, and I agree the stakes are small in the OP's situation, the action is still one of gambling - if you accept my definition of it.

A second example is that of someone who owes more on their house than it is worth. If they can make the mortgage payments, they still have a house to live in - in other words, they haven't lost everything. The house still has some value to the mortgage holder in such instance, just like the euros would have some spending value even if one paid for them an amount more than twice what they ultimately came to be worth. But by my definition, if one bought said house largely on unfounded belief - say, that it would go up in value - then one has gambled. And lost. (And sadly, a lot more than would likely apply in the case of the traveler who bought euro in advance. Nothing 'Royale' about the current mortgage casino game, alas.)
Sue_xx_yy is online now  

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