Best time to convert pound in dollars?

davidsureman

I been watching the rate for the pass few days and it has been increasing since last week where I saw the dollar at 1.51 now around 1.58 and new Zealand dollar around 1.98 now around 2.11 is it worth converting my pounds into these currencies. I have been unsure if I should convert them in to usa dollars or new Zealand dollars. Is there a way to do this for free or cheap. Is it worth the hassle I can sell when the euro debate makes the market unsettled again. I want to convert 5 figure sum?. Thanks.

bowlhead99

davidsureman wrote: »

I been watching the rate for the pass few days and it has been increasing since last week where I saw the dollar at 1.51 now around 1.58 and new Zealand dollar around 1.98 now around 2.11 is it worth converting my pounds into these currencies.

If you had bought two weeks ago your £100 would buy $151. Now the rate is $1.58 to the pound, you would only get £95.50 back. So, it is a good job you didn't give away your sterling to buy dollars and then have sterling strengthen and dollars weaken, like happened in the last fortnight.

If sterling is getting more valuable in dollar terms and dollars are getting less valuable why do you want to buy dollars now?

A few years back, you got over 2 US dollars to the pound. Or the other way around, someone holding dollars had to give a lot of them (more than two dollars) to get a pound. So, are you confident that if you spend £10000 buying US$15,800, you will not find yourself in that situation where you have to pay two dollars to get back every pound, and your $15800 becomes worth only £7,900 ?

I have been unsure if I should convert them in to usa dollars or new Zealand dollars.

If you think they will both strengthen against pounds, why not buy both. At the moment as you have seen, they are both weakening. However, we are not going to have another new UK government elected in the next couple of weeks and the economic data being published in the next couple of weeks in UK, US and NZ may not contain the same surprises as what was published in the last couple of weeks, so it is impossible to say what will happen to the currency rates.

Is there a way to do this for free

No, why would anyone do something for you that involves work and cost and risk, for free?

or cheap

Better rates are available if you are doing larger transactions (5 or 6 or 7 figure sums rather than a few hundred pounds). Use an FX broker rather than a high street bank or bureau de change.

However, unlike just doing a few hundred pounds which you can keep as cash, you would need a foreign currency bank account to keep the proceeds in. There are not many UK banks offering NZ dollar accounts. Also, if you have £10-£20,000 you can put it in a Santander 1-2-3 current account and get 3% a year interest on it. If you have US$15-30,000, you will not find a dollar current account paying anywhere near that rate.

Is it worth the hassle I can sell when the euro debate makes the market unsettled again.

What will the rate be then. USD1.30? USD1.80? NZD 1.60? NZD 2.50?

It is not possible to say if it is worth the hassle, because although you can quantify the hassle in terms of time taken to find a broker and time taken out of your day to arrange opening and maintaining bank accounts and the costs of moving money - it is not possible to know if you will make or lose money on the FX trade. You give up the certainty of bank interest income for the uncertainty of speculation on global currency markets which could produce a gain or loss of 25% or more over the course of a year.

dealer_wins

You may as well put up the next 6 months calender on the wall and throw a dart at it, and buy your currency on the date with a little hole in it.

atush

I agree, even the eperts cant predict the exchange rate- it has changed a lot recently due to the election (the outcome of which was not predicted by the market makers).

So buy currency when you have the spare cash and see a price you like.

But us a CC with money saved to pay it off for most expenses

dunroving

atush wrote: »

I agree, even the experts cant predict the exchange rate- it has changed a lot recently due to the election (the outcome of which was not predicted by the market makers).

So buy currency when you have the spare cash and see a price you like.

But us a CC with money saved to pay it off for most expenses

Agree with all of this, plus "and after you've changed currencies, stop checking to see if you'd have got a better deal later"

To the OP: Most people I know on an expat board use XE.com and other similar agencies, in order to get the best rate on the day.