Buy Dollars

philadam

davetrousers wrote: »

The rate you buy the currency at is a lot different to what you would sell it back at. Do you think if you buy at $1.90 and the rate stayed exactly the same that they would buy it back at $1.90. Oh no they would probably buy it back at about $2.10 so you would lose money.

If you bought at $1.90 and then the rate fell to $1.75 then they would probably buy it back at about $1.95 so you would lose money.

So you need to be aware of the (general) diffference between the rates that they sell currency to the rate they buy it off you.

Edit: Just looked at post office website: Today, they will sell US dollars at $1.92 but buy back at $2.18. It would have to fall loads to make any money.

There are ways you can limit this huge spread by avoiding dealing in cash, but if you went to your local bank and opened a dollar account say and transferred money into it, the rate although not as penal as the cash rate will still be pretty poor and I think you'd be surprised at the discrepancy between what is quoted in the paper or BBC website and what you'd actually get. The headline rate you see is usually the mid-market price for large corporate deals and the spread itself in these cases is much narrower than what you'd obtain as a punter with £10K in his pocket.

Buying now to take advantage of the rate for spending in the future is a different thing altogether and as I travel to the States quite a lot it is something I am considering and will probably end up opening an account there.

It's a huge subject and one that needs a lot of reading up on before doing anything, but I'll stand by my previous comment here and say speculation as you describe is best avoided.

Phil

pjala

Open an account with a spreadbetter, then bet on the Dollar versus another currency you think will weaken. There are various i.e Dollar/Euro, Dollar/Sterling etc.
The problem is that spreadbetters like Finspreads, customers in the majority loose!
Only a few win, but if you do it is tax free.