Should I buy Euro's now?
 

I will be in Spain in June of this year. I'm wondering what others think re buying Euro's now versus June. Will it devalue further?

Key question - can you get euros at a decent rate -most banks pay a lousy rate but if you can get the going rate can't hurt as Euro is likely to rebound IMO - but even then the difference to the average traveler - even 10% higher is so little compared to the costs of your trip - plus the Euro vs dollar has always defied predictions in my long years of tracking them - no one was predicting a plunge in the Euro and the Euro has already rebounded quite a bit.

Unlikely to be huge shifts in values I think.

Nobody knows. But unless you are buying euros in the thousands, the amount by which it is going to fluctuate between now and June is not going to make much difference, especially if you have to pay a noticeable charge from your bank for changing money, or if the dollars you are using to buy euros are presently making money for you if left in place.

Nobody knows. Possible if Greek turmoil continues or even bigger quantitative easing by ECB. I can't see any immediate upturn in Eurozone economy so further weakness is quite possible. But I'd be very rich if I knew for certain. Unless you can buy euro at close to interbank rate, the money you lose by buying cash euro at a poor rate may more than offset any gains versus using no-fee card in Spain.

We're waiting to purchase euro over there when we go this spring. I think it will plummet even further. Of course, with my financial savvy, the euro will probably go up to 1.40 by the time we go.

(((H))

>>>"no one was predicting a plunge in the Euro and the Euro has already rebounded quite a bit."<<<

Actually, nearly everyone who follows currency issues expected the continued decline in value of the euro, and that is exactly what it did, and and it has not "rebounded quite a bit." It dipped to 1.11 and today is trading at 1.13. The majority view is for 1-to-1 parity by 2017, and some say by 2016, and some say by then end of 2015. Few people expect any "rebound."

But like I said, no one knows. And like you said, for most tourists traveling as a couple with a typical tourist budget of under 10,000 euros, the fluctuations or a penny here and there over the next six months seldom offset the cost of paying transaction fees or turn out to be noticeable anyway.

I'm going over in March and won't buy now. Whatever "savings" I can preserve by locking in now will be eaten away by fees charged by the bank I'm getting the money from.

>>I can't see any immediate upturn in Eurozone economy so further weakness is quite possible<<

More than possible. Germany just issued a revised forecast of improved economic growth in 2015, and Germany is the euro-zone's largest economy. Much of that credible optimism is based on the ECB's announced new monetary policy that commits it to deliberately weakening the euro over the longterm indpendent of economic upturn by conventional measures of that.

However, the euro's fate is not entirely in the hands of the ECB. It is also in the hands of the finance ministers of a few European countries, and the IMF. And not knowing how they will behave, or miscalcuations on their part, could have profound (unknown and unknowable) effects on the value of the euro from now into the foreseeable future.

It's a coin flip - you either win a little if you get a bood exchange rate or lose a little - not worth worrying about IMO.

Almost certain the euro will rebound against the U S dollar the second week in June as that will be when I am traveling.

The problem is getting Euros for a reasonable cost in your own country. It's common for banks to charge an exchange fee, and you think you are getting a good deal, but when you check the current exchange rate on xe.com, you discover you are paying about 10% more than you need to. (The bank doesn't tell you that they pad the rate).

Wait until you get there to get Euros. Do make sure you have a bank account that won't charge you too much to withdraw your money in Europe. Spend your time working on that - something you actually have control over.

I have repeatedly purchased euros from Wells Fargo for five percent more than the spot rate. So if the spot rate is 1.13, Wells Fargo would sell them for $1.1865. This is a great deal, and cheaper than many ATM cards. There are other banks which change money at similar fees.

I personally like to bring most of my expected expenses in euros in cash. Other people panic if they have more than $5 in their pocket. That's a personal decision.

Nobody knows what the exchange rate will be six months from now. If they did, then the exchange rate would move there immediately as everyone rushed to take advantage of this knowledge. There is talk of the euro going to parity, but it just as easily could rebound to $1.25. Buying some euros now would seem like a good way to lock in what is currently a good exchange rate, and also a good way to save money for your trip.

>>There is talk of the euro going to parity, but it just as easily could rebound to $1.25.<<


Don't think that would be easily done. Even though currency values are affected by many uncontrollable factors, it is not utterly whimsical, and the biggest factor -- monetary policy -- is kept transparent just to avoid chaos in the markets. Current monetary policy of the euro set by the ECB is to weaken it and the international consensus is to support the policy. Anything can happen -- including the possibile disappearance of the euro -- but the most likely future for the euro is a continuing decline in value.

If you can afford to lose money, you can gamble if you like. If you are a close watcher of currency markets, it is possible that you might win more often then someone who just throws darts. For most tourists, the amounts of money being exchanged are so negligible, and fluctuations of the rate of the currency within any given six months to 12 months are so minor, it really doesn't matter much to your personal bottom line whether you come out ahead or behind.

If, for example, you spend $5,000 on a trip to Europe, most of it will be paid in $ such as airfare, prepaid hotels and car rental, and you only need euro for incidentals like meals, local travel, souvenir shopping and admissions. Even if you spend 500 euro, 10% movement will be 50 euro or $56, which is a little over 1% of your overall budget.

Are you in Spain now? Buy now.
Not in Europe? Wait until you get there.

I agree, you can't get them fee free in the US, so forget it. Trying to be a currency trader and expert in the FOREX market isn't practical for tourists.

Hurdle,you say you can get Euros from Wells Fargo for 5% over the spot rate, and you think that is better than an ATM rate? I've always gotten very close to the spot rate (as per xe.com) via ATMs, but then I have an account that charges only 1% on foreign exchange and has no charge for use of a foreign ATM. Since you bank at Wells Fargo, when you withdraw money from an ATM, you are charged $5 per use plus 3% foreign exchange premium. No wonder you think buying Euros for a 5% premium is s good deal! If you travel much, I'd suggest you research an account that would enable you to get your foreign currency from an ATM for very little cost. Suggestions: small banks, brokerages, credit unions.

A year ago this time it was at $1.35 (go to XE.com and look at that handy chart) and today it is at $1.13.

I would not do anything through any bank or for that matter through any of those change bureaus. Why? The latter make their money either by charging you little or no commission while giving you a poor exchange rate or by giving you a so-called "better" exchange rate and tacking on a higher commission. They do NOT work for free.

The bank: try buying or ordering foreign currency and see just how much the bank adds on in convenience fees.

I would wait and use an ATM but to each their own.

I'd wait and withdraw them from ATMs in Europe.

I concur with Sandra that it is most likely that the Euro will continue to decline in value against the dollar, or at least won't turn up any time soon. Also concur that a decline in the Euro was in the cards for a while and in fact has been going on for some months, although not to the extent of the last couple of weeks. We are planning to go to Spain this year and believe we'll see some further decline in the Euro.

In addition to the ECB's goals, if the Fed raises US interest rates (and it has indicated it may do so in June), the dollar will rise, and in any event, interest rates in the US have nowhere to go but up while Europe's are relatively high.

Louise, see what your bank ATM card's terms are. Most of the big banks have affiliates in Europe which do not assess withdrawal fees. E.g. Bank of America where we bank is paired in France with BNP Paribas (but does not appear to have a Spanish affiliate). When we arrived in France, we used Google Maps to find the nearest BNP Paribas ATM and repeated that operation as needed.

Kathie,

I don't bank with Wells Fargo except to exchange currency. I am aware that there are no-fee ATM accounts out there, but most charge a fee. In those cases where people are dealing with an ATM account that charges three percent foreign exchange fee plus five dollars per transaction, it is definitely a better deal to take cash.

I have pointed out in the past the problem we had with my wife's card being eaten in Italy. Without a good wad of cash, our trip would have been ruined. Just as important, I haven't found working ATM machines to be as ubiquitous as some would claim. I do not want to spend my valuable time trying to find a working ATM, or waiting in line to use a working ATM.

I currently don't have an ATM or debit card, because of the extreme level of risk involved. But next time I travel I will likely open a special travel account, so I can access cash from ATM machines. But I still plan to carry a fair amount of cash with me, just because that is how I like to live.

"in any event, interest rates in the US have nowhere to go but up while Europe's are relatively high. "

Eh?

From today's Economist. 10 yr bond rates

USA 1.78%

European sovereign states:
UK 1.53%
Sweden 0.73%
Switzerland 0.0%
Norway 1.36%

Eurozone:
ECB 0.35%
France 0.58%
Germany 0.35%
Italy 1.64%
Spain 1.48%

Flanner--I didn't mean market rates--I meant benchmark rates between Fed and ECB. The Fed is now talking about raising its benchmark rate while the ECB is talking about "quantitative easing," a stage that that the Fed went through in the US.

The US economy appears to be improving while the Eurozone's is worsening--in fact, there is some indication that deflation may be setting in. When the US improvement looks certain, the Fed will raise its benchmark rate and that will drive the dollar higher. So if I had to bet on the relatively short term--that is, decide whether to buy Euros now or wait until summer 2015--I'd wait because I think it is more likely that the dollar will continue to rise relative to the Euro.

15 years ago this month the Euro and USD where nearly on a par, by the end of the year the Euro was worth only $0.85. Could it repeat? Possibly, but who knows.

And having bought a hunk of euros, you'll have to carry it around, protecting the money from pickpockets. With ATMs you just get what you need for that day or so.

Robert--we can only dream!

FHurdle, "I currently don't have an ATM or debit card, because of the extreme level of risk involved. " I guess we all have our own definition of risk. And you should travel the way you are most comfortable. I never use debit cards, because they don't offer the same protections against fraud that credit cards do. But you can get an ATM card that is not a debit card, if that it your concern. I have my bank issue me a card that is an ATM-only card. I know of people who have their financial institution "turn off" the debit card function on the card they use to withdraw money from ATMs.

You are quite right, a card can be eaten by a machine. I've never had that happen in all of my travels, but we do each bring two ATM cards on each trip.

Robert, I am looking forward to the Euro being at par (or below) again!

Because I travel to Europe yearly, I always buy a little euros on an dip.

That way buying them in small quantities but more often is easier and more palatable when the price is higher :)

Robert:

So true. I was in Paris in November of 2000 and a friend of mine and I each bought a stainless Cartier Tank Francaise watch at the Cartier store at Place Vendome. Price per watch was US $1700 before the VAT refund. Still have the watches, too.

I also agree with those who think that the Euro is more likely to depreciate further against the dollar than appreciate. I also just use an ATM to get cash and think it is safer than carrying a lot of cash. Only in Japan do I tend to carry more cash than normal. We do have 2 atm cards on two accounts when we travel just to be safe. I also carry $2000 in AMX travelers checks as an extra precaution but that is probably overkill.

Since it's nearly impossible to cash a traveler's check in Europe, and has been for years, having them is a total waste.

<< Because I travel to Europe yearly, I always buy a little euros on an dip.>>

What does "on an dip" mean?

If you have a Charles Schwab account, their debit card charges NO FEE. I used it in Prague this past November and we got the XE.com rate, nothing added. And Schwab will rebate any ATM charges so it really is great. We also have a credit card that doesn't charge any foreign transaction fee and got the XE.com rate with that as well. Those sneaky fees really can add up so having these two cards is a nice perk.

But, to give you an example of never knowing how currency will behave, on our way to Prague, we had a short layover in Vienna and decided to take out some Euros for future trips at an ATM because the rate was "only" $1.26. While it seemed like a good rate at the time, in retrospect, not so much. We only took out 120 Euros. And compared to what we were paying for Euros when we went to Berlin in June, it seemed cheap.