Need advice on which currency to buy!
May 3rd, 2011, 09:29 AM
#1
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Need advice on which currency to buy!
Im Australian and next year I'm going to Europe for 47 days from late June to mid August, then back home for a few weeks, then going to America in September. Due to the short time between trips I need to save all my spending money now.
The bank I'm with has a travel money card that holds up to 6 different currencies at a time. The bank charges you 1% of whatever you load onto the card, but whatever money is on that card can be changed between currencies free of charge.
The Aussie dollar is 1.05US at the moment and is meant to stay around this mark for the next few months. Also the Euro is pretty high currently, so it would make sense to buy US dollars now and convert them when the US dollar is stronger and the Euro is weaker. However! The Olympic games are in London pretty much the same time as my holiday, which will no doubt make the euro extremely strong.
So do I buy US dollars now and hope in the next few months the Euro will drop a bit before it strengthens again or do I stock up on as many euros as possible now, then when I come home change what's there for America in US$ because the Euro will be strong like the Australian dollar is now???
The bank I'm with has a travel money card that holds up to 6 different currencies at a time. The bank charges you 1% of whatever you load onto the card, but whatever money is on that card can be changed between currencies free of charge.
The Aussie dollar is 1.05US at the moment and is meant to stay around this mark for the next few months. Also the Euro is pretty high currently, so it would make sense to buy US dollars now and convert them when the US dollar is stronger and the Euro is weaker. However! The Olympic games are in London pretty much the same time as my holiday, which will no doubt make the euro extremely strong.
So do I buy US dollars now and hope in the next few months the Euro will drop a bit before it strengthens again or do I stock up on as many euros as possible now, then when I come home change what's there for America in US$ because the Euro will be strong like the Australian dollar is now???
May 3rd, 2011, 09:33 AM
#2
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No one can ever predict what's going to happen with currency exchanges, so I won't even try. But as for that travel money card, I'd investigate it very carefully - most of those bank card offerings are a total rip-off.
May 3rd, 2011, 09:41 AM
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People here have posted about such cards (is it the VISA one?) and it had horrendous charges and conditions.
Go, use your ATM card. No one can predict where currencies will go ("and is meant to stay around this mark for the next few months"...who can say that with certainty??)
Buying now just locks in a loss if the currency stays same or gets better. Why gamble? Do you think the Aussie $ is going to vary by....5/10/25/50%? Is there economic reasons for a dramatic swing?
The US $ has its issues which do not apply to Australia. Coming from Canada, we have some similar outlooks.
Go, use your ATM card. No one can predict where currencies will go ("and is meant to stay around this mark for the next few months"...who can say that with certainty??)
Buying now just locks in a loss if the currency stays same or gets better. Why gamble? Do you think the Aussie $ is going to vary by....5/10/25/50%? Is there economic reasons for a dramatic swing?
The US $ has its issues which do not apply to Australia. Coming from Canada, we have some similar outlooks.
May 3rd, 2011, 09:44 AM
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I don't think you buy any foreign money now. You can't predict if euro or dollar will go up or down, although some people here on fodors will assure you they know the answer. OK, maybe it's only one person, and she's yet to be correct.
I don't think the summer Olympics in London have any bearing on the euro. Legal tender in the UK is pounds, and currency rates are dominated by larger economic factors, not 2 week sports events in another country.
Before you take the plunge be sure to find out what the EXACT exchange rate is. For those of us in the USA these money cards are a very bad idea, but I understand that Aussies can get a much better deal. I don't see how any company can offer free foreign exchange for only 1% fee. You quote $1.05 USD for AUD, but the official rate today is $1.09, so you're already losing close to 4% if you buy USD at $1.05. I'm also not sure what you mean by meant to stay at $1.05 - it's been monotonically increasing since March. Caveat emptor.
For Americans by far the best way to get cash is to use an ATM to withdraw money from our checking account. As low as 0% over the official interbank rate if you use the right banks & ATMs, but more commonly 1% markup over the interbank rate.
Personally I leave currency speculation to those that can afford to lose $.
I don't think the summer Olympics in London have any bearing on the euro. Legal tender in the UK is pounds, and currency rates are dominated by larger economic factors, not 2 week sports events in another country.
Before you take the plunge be sure to find out what the EXACT exchange rate is. For those of us in the USA these money cards are a very bad idea, but I understand that Aussies can get a much better deal. I don't see how any company can offer free foreign exchange for only 1% fee. You quote $1.05 USD for AUD, but the official rate today is $1.09, so you're already losing close to 4% if you buy USD at $1.05. I'm also not sure what you mean by meant to stay at $1.05 - it's been monotonically increasing since March. Caveat emptor.
For Americans by far the best way to get cash is to use an ATM to withdraw money from our checking account. As low as 0% over the official interbank rate if you use the right banks & ATMs, but more commonly 1% markup over the interbank rate.
Personally I leave currency speculation to those that can afford to lose $.
May 3rd, 2011, 09:51 AM
#7
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I am going to look over every term regarding this card so if there is horrendous charges I wont use it. But I would prefer not to use my ATM card because the money on there will be Australian dollars, so with each time I use it I'll get a 2% conversion fee and a flat charge of about $5. Over 47 days this adds up.
And yeah unfortunately there will be a bit of a swing for the Australian dollar eventually. Were only so high right now because before the GFC we started selling some major resources so we were the only developed nation to avoid recession. I'm pretty sure this is the strongest we've ever been against the US dollar so I'd like to make the most of it.
And yeah unfortunately there will be a bit of a swing for the Australian dollar eventually. Were only so high right now because before the GFC we started selling some major resources so we were the only developed nation to avoid recession. I'm pretty sure this is the strongest we've ever been against the US dollar so I'd like to make the most of it.
May 3rd, 2011, 10:05 AM
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"Also the Euro is pretty high currently, so it would make sense to buy US dollars now and convert them when the US dollar is stronger and the Euro is weaker. However! The Olympic games are in London pretty much the same time as my holiday, which will no doubt make the euro extremely strong. "
Are you a Forex expert? If so why ask us? If not, why do you think you can beat people who do this for a living at their own game?
You may get upset at this, but you're clearly not planning a holiday: you're trying to be a smart arse on currency speculation ("it would make sense to buy US dollars now and convert them when the US dollar is stronger and the Euro is weaker"). You're manifestly out of your depth ("The Olympic games are in London pretty much the same time as my holiday, which will no doubt make the euro extremely strong" has to be, even by the standards of uninformed balderdash about currencies the naive so often post here, worthy of an Olympic Gold for outstandingly fatuous twaddle.)
No-one has the foggiest how currencies will move. But just about everyone on this board who's used to travelling agrees on three things:
- Uninformed speculation on currencies makes forex dealers rich and punters poor
- The simplest method for foreign travel is to put money into an interest-bearing account in your own currency in your own country and draw out, via ATMs, just as much as you need every few days
- There's no such thing as "free" currency conversion. Banks who claim to offer it fee-free or commission-free will rip you off on the conversion rate. Why? That's what banks do.
Are you a Forex expert? If so why ask us? If not, why do you think you can beat people who do this for a living at their own game?
You may get upset at this, but you're clearly not planning a holiday: you're trying to be a smart arse on currency speculation ("it would make sense to buy US dollars now and convert them when the US dollar is stronger and the Euro is weaker"). You're manifestly out of your depth ("The Olympic games are in London pretty much the same time as my holiday, which will no doubt make the euro extremely strong" has to be, even by the standards of uninformed balderdash about currencies the naive so often post here, worthy of an Olympic Gold for outstandingly fatuous twaddle.)
No-one has the foggiest how currencies will move. But just about everyone on this board who's used to travelling agrees on three things:
- Uninformed speculation on currencies makes forex dealers rich and punters poor
- The simplest method for foreign travel is to put money into an interest-bearing account in your own currency in your own country and draw out, via ATMs, just as much as you need every few days
- There's no such thing as "free" currency conversion. Banks who claim to offer it fee-free or commission-free will rip you off on the conversion rate. Why? That's what banks do.
May 3rd, 2011, 10:12 AM
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You remove the max when using the ATM, so the $5 fee becomes irrelevant.
No matter what, somewhere along the line, you pay for foreign currency, be it a fee or in the exchange rate. Remember that the bank/exchange bureau can use any fee or exchange rate they want, in order to make a profit.
2% is not bad.
No matter what, somewhere along the line, you pay for foreign currency, be it a fee or in the exchange rate. Remember that the bank/exchange bureau can use any fee or exchange rate they want, in order to make a profit.
2% is not bad.
May 3rd, 2011, 10:16 AM
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I'm aware that the UK uses pounds, but people travel all over the world to go to the Olympics. The UK will have a influx of revenue from countries sending competitors and coaches and a global media. I'm sure this will have a flow on effect on the greater European economy as the UK will require more imports from surrounding countries and people who've travelled across the globe to be there take the opportunity to do some travel through Europe. Also it will be European Summer which is the peak tourism season regardless.
Hence my logic that the Euro will be strong at that particular time. My holiday also starts in London so I'm worried about the pound as well.
1.09 already, really? Well by around this I mean above th US dollar. Prior to the recession we were about 80 US cents.
Hence my logic that the Euro will be strong at that particular time. My holiday also starts in London so I'm worried about the pound as well.
1.09 already, really? Well by around this I mean above th US dollar. Prior to the recession we were about 80 US cents.
May 3rd, 2011, 10:28 AM
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@flanneruk
Totally disrespectful.
No I'm not a Forex expert. You know what I am.
A full time uni student with a full time bar job.
So excuse me if I try to get the most out of my money.
I study business and property economics so yeah I have analyses the figures. But I thought I'd get some advice off such seasoned travellors. If no one could adequately predict the way currencies could move Forex would be considered gambling not investment. But they trade for quick profits, not to use the money as a fiefdom currency and had I asked them I would have received an equally hostile reaction to my question for not being solely focused on forex itself.
Totally disrespectful.
No I'm not a Forex expert. You know what I am.
A full time uni student with a full time bar job.
So excuse me if I try to get the most out of my money.
I study business and property economics so yeah I have analyses the figures. But I thought I'd get some advice off such seasoned travellors. If no one could adequately predict the way currencies could move Forex would be considered gambling not investment. But they trade for quick profits, not to use the money as a fiefdom currency and had I asked them I would have received an equally hostile reaction to my question for not being solely focused on forex itself.
May 3rd, 2011, 10:34 AM
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Negmeg,
You are speculating. If you want to test your theories, go back to previous events (Olympics, World Cup, Royal weddings,etc..) and test your theory.
My theory, if there are so many tourists going, hotels in...Paris, for example, will raise their rates, based on the idea that there will be more people. Rates go up, people decide "Paris is too expensive". People like me will skip London knowing that all the prices will be jacked-up. Net effect (my prediction): same number of tourists in London, paying higher rates.
London is a huge city with a high number of tourists. Do you think they will need to buy more food because of the Olympics? more oil? more...French wine? They get millions of tourists a year. One event is not going to change the trade patterns of a country.
You are speculating. If you want to test your theories, go back to previous events (Olympics, World Cup, Royal weddings,etc..) and test your theory.
My theory, if there are so many tourists going, hotels in...Paris, for example, will raise their rates, based on the idea that there will be more people. Rates go up, people decide "Paris is too expensive". People like me will skip London knowing that all the prices will be jacked-up. Net effect (my prediction): same number of tourists in London, paying higher rates.
London is a huge city with a high number of tourists. Do you think they will need to buy more food because of the Olympics? more oil? more...French wine? They get millions of tourists a year. One event is not going to change the trade patterns of a country.
May 3rd, 2011, 10:37 AM
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I also just don't believe that your bank is essentially selling you foreign currencies for only 1 one percent markup. Many of those cards have monthly maintenance fees, also, as well as fees to use the money, fees to cash it in if you want the remainder, etc. And then there is the exchange rate difference between your currency and the one you "buy" to put on the card. I bet you the exchange rate isn't the interbank rate, but marked up and this other 1 pct is just a flat fee on top of that.
If you are talking about the COmmonwealth Bank, there is a 15 AUD charge to start the travel money card, a couple euro ATM fee every time you use it, a 2 pct fee when you use a different currency than on the card (which is pretty good, actually). But those are just the things they call "fees", they don't define the foreign exchange rate used when you first buy it (ie AUD to euro).
Right now on their website, they state they will "sell" you euros on the travel card for 100 AUD=69.02 euro. The true interbank rate today is 100 AUD gets you 73.9 euro, so that is a 7 pct cost or loss. Doesn't surprise me, a lot of banks where I live charge 7 pct on foreign currency, also. Now if you are talking about a different bank, check out all those things, not just what they are calling fees but what the exchange rate is when you buy euro or whatever you choose to put on it.
If you are talking about the COmmonwealth Bank, there is a 15 AUD charge to start the travel money card, a couple euro ATM fee every time you use it, a 2 pct fee when you use a different currency than on the card (which is pretty good, actually). But those are just the things they call "fees", they don't define the foreign exchange rate used when you first buy it (ie AUD to euro).
Right now on their website, they state they will "sell" you euros on the travel card for 100 AUD=69.02 euro. The true interbank rate today is 100 AUD gets you 73.9 euro, so that is a 7 pct cost or loss. Doesn't surprise me, a lot of banks where I live charge 7 pct on foreign currency, also. Now if you are talking about a different bank, check out all those things, not just what they are calling fees but what the exchange rate is when you buy euro or whatever you choose to put on it.
May 3rd, 2011, 10:47 AM
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Major global events change everything about a countries trade and economic activity for a short time in some way. No London wont have enough food, there are no farms in London, so they import fresh meat from English farms. Fruits from Spain and Greece. On top of the people who live there, and the normal amount of tourists there will be more people for the games in London. No country in their right mind would build olympic venues in major cities for years at their own expense if it didnt have any effect on the economy. So yes! They will import more food, more wine, more oil for the increased public transport...people like you might forgo Paris for the expense, but people like me who live on the worlds biggest island would make every opportunity to see as many countries as possible if I was over there.
I am speculating over the dollars and euros. I can't understand when theres so much money to be saved if you consider your options why I'm getting such negative responses. Clearly I have asked the wrong forum.
I am speculating over the dollars and euros. I can't understand when theres so much money to be saved if you consider your options why I'm getting such negative responses. Clearly I have asked the wrong forum.
May 3rd, 2011, 10:52 AM
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@ christina
Yeah I knew of the other fees outside the one percent but compared to the fees of alternatives it was pretty good. Though you did point out the 7% skim off the top for me. Thank you
Yeah I knew of the other fees outside the one percent but compared to the fees of alternatives it was pretty good. Though you did point out the 7% skim off the top for me. Thank you
May 3rd, 2011, 11:40 AM
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I have been traveling all over the world on business for over 20 years. On my very first trip I foolishly purchased Traveller's Checks -- what a waste of time and money. On my 2nd overseas trip, I purchased some local currency before I departed -- what a rip-off from my local bank!
Since then, in addition to keeping a small stash of just about every currency of places I'm likely to visit, I normally just exchange a small amout at the airport upon arrival -- enough for the taxi/train to my hotel and enough to get me safely to a local bank or ATM near my hotel the next business day. Typically, I will being some cash with me in my currency (US $), as well as have plenty on deposit in my local back so I can use my ATM debit card when necessary. I also use a business and personal charge card when necessary (hotel rooms, some meals, etc.).
I agree with most that trying to guess the various exchange rates 2 months down the road is impossible. I also remember once in October 1997 that the official US/Taiwan-ROC oxchange rate was about $1 US = 26 NT upon departure, but $1 US = 34 NT upon arrival in Taipei after few days in Hong Kong. (The HK $ had not fluctuated much at all as it is pegged to the $US.) Thankfully, my Taipei hotel rooms had been booked in $US, so my hotel stay was much cheaper than I had expected and some great local dinners were also cheap. That drastic currency change had been impossible to anticipate... and IF I had purchased Taiwan Dollars before departure, I would have been extremely unhappy!
MY SUGGESTION: Focus your pre-trip time on what all of the fun you will have, and don't worry about the currency issues.
Since then, in addition to keeping a small stash of just about every currency of places I'm likely to visit, I normally just exchange a small amout at the airport upon arrival -- enough for the taxi/train to my hotel and enough to get me safely to a local bank or ATM near my hotel the next business day. Typically, I will being some cash with me in my currency (US $), as well as have plenty on deposit in my local back so I can use my ATM debit card when necessary. I also use a business and personal charge card when necessary (hotel rooms, some meals, etc.).
I agree with most that trying to guess the various exchange rates 2 months down the road is impossible. I also remember once in October 1997 that the official US/Taiwan-ROC oxchange rate was about $1 US = 26 NT upon departure, but $1 US = 34 NT upon arrival in Taipei after few days in Hong Kong. (The HK $ had not fluctuated much at all as it is pegged to the $US.) Thankfully, my Taipei hotel rooms had been booked in $US, so my hotel stay was much cheaper than I had expected and some great local dinners were also cheap. That drastic currency change had been impossible to anticipate... and IF I had purchased Taiwan Dollars before departure, I would have been extremely unhappy!
MY SUGGESTION: Focus your pre-trip time on what all of the fun you will have, and don't worry about the currency issues.
May 3rd, 2011, 11:41 AM
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<I>However! The Olympic games are in London pretty much the same time as my holiday, which will no doubt make the euro extremely strong. </I>
Just how much of the currency market do you think is driven by tourism? Let's assume that 300k additional foreign tourists visit due to the Olympics, each spending an additional $30k. This would be around 0.5% of the market cap of the FTSE 100. I'm sorry, but the Olympics are not going to move the market.
Frankly, if you want to trade in currencies, then ask a financial advisor, not a travel board.
Just how much of the currency market do you think is driven by tourism? Let's assume that 300k additional foreign tourists visit due to the Olympics, each spending an additional $30k. This would be around 0.5% of the market cap of the FTSE 100. I'm sorry, but the Olympics are not going to move the market.
Frankly, if you want to trade in currencies, then ask a financial advisor, not a travel board.
May 3rd, 2011, 11:43 AM
#20
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Sorry I don't mean to be sensitive over disagreement, different opinions I can handle but then apparently I was gold medalist of the naive on currency, and I wasn't planning a holiday I was trying to be a greedy smart arse? Then everything started sounded condescending.
