Buying or selling Euros? Make a move
Wednesday 19th May, 2010, Global Currency Exchange market comment
Buying, or selling, euros?
EURO to USD / AED: The Euro slid again yesterday against the US Dollar, dropping to below $1.22. This had a great deal to do with Germany’s announcementthat they wish to ban “short selling” of shares and euro government bonds among its 10 most important financial institutions. This was the lowest figure against the dollar since April 2006.
Most people believe the euro has further to slide against the dollar and the aed of Dubai and Abu Dhabi. If you HAVE to sell euros soon, for dollars or aed, then you may want to talk to us about setting a rate, or just buy now!
POUND TO EURO: The pound continues to hold at over 1.15, with some good news coming from the Bank of England. It looks likely that the Bank will maintain interest rates at the current low level. British businesses can take advantage of the situation, with the lowest period of borrowing at this level for some considerable time. This, in turn, will help the economy to recover at a faster rate than Europe.
POUND to US DOLLAR: With some good news coming out of the UK economy, the Pound has slowed it’s decline, but sits at an uncomfortable $1.42. Most economists believe, Sterling will go lower against the USD.
With the currency rates altering as quickly as they are, we suggest you choose from the following:
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If the rate suits you now, make that exchange. It may go a bit more in your favour, but it’s just as likely to go against you.
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If the rate doesn’t suit you, contact us here, and let us know what rate you need. We will put you on our “Rate watch” list and contact you as soon as your rate is achieved.
Talk to us about placing just a 10% deposit down, and fixing your currency deal at the best exchange rates today. It could save you thousands.
Call: 0044 1480 458 400 (International) or 01480 458 400 (if inside UK) for the best currency exchange rates. If you prefer, contact us by email here
How to Buy a Forward Currency Conract, and Save money
How to Buy a Forward Currency Contract.
If you have a need to fix a currency exchange rate today, for a payment date at some future point, then you are likely to need a Forward Currency Contract.
- You may have agreed to buy a property today, but the completion of the legal paperwork may be set for 2 month’s time
- You may be in business, and need to fix the price of ordered imports at today’s exchange rate. Especially, if you anticipate that the exchange rate may not be as much in your favour when you need to pay for the goods.
- You may work abroad and have a need to regularly transfer a sum of money, but you believe that the exchange rate is at it’s best today
As long as you believe that the exchange rate is good , and you have 10% of the full amount you want to buy, then a Forward Currency Contract could be the choice for you.
Here’s an example:
- You agree to buy a property for 200,000 Euros and you have your money currently in Pounds Sterling.
- You are planning to have a 100,000 euro mortgage, so you need to buy 100,000 euros with pounds.
- The exchange rate is at the best rate for selling pounds to buy euros for a while.
- In this example, the GBP:EUR exchange rate is 1.17 to 1, then the property is costing you £170,940.
If the exchange rate changes to 1.08 by the time that you need to change the money, then the price of the property effectively goes up by £14,245 to £185,185.
As you will be changing half of that amount, you will need to find an extra £7122 on the completion date.
To avoid this, all you have to do is:
- Agree to buy €100,000 today, at a rate of 1.17, but send your currency dealer just 10% as a deposit.
- Pay the balance on the day that the contract ends, which can be set for over a year’s time.
The downside? Well, of course, the exchange rate may go the other way. But, you will at least have the comfort of knowing that the price of your property purchase is fixed.
FAQ: Can I have the money earlier than planned?
Yes, because your currency can create the currency exchange as a “Time Option Forward Currency Contract”. Provided you send the money to the currency broker, they will change it and send it to wherever you ask at any date before the final day of the contract.
To discuss how your currency dealer can help you with a Forward Currency Contract, please speak to Zoe on 0044 (0)1480 458400. www.fx-foreignexchange.com
