Where to Buy Euros, Pounds?

[rhk109]

I am taking a trip to Europe next week. Where is the best place to get Euro's and Pounds ahead of time?

[jriera]

The best exchange rate will be to use your ATM card while in the foreign country.

Check www.ordercurrency.com or your local bank branch if you want to buy in the US.

[RallyJon]

The best exchange rate will be to use your ATM card while in the foreign country.

2nd. It's really better not to think about money while in Europe these days. Bend over, have fun, work overtime to pay off the bills when you return.

[pwd72s]

Originally posted by rhk109
I am taking a trip to Europe next week. Where is the best place to get Euro's and Pounds ahead of time?

Forget the previous advice...buy the currency you think you need for your trip from a USA bank located in a major city. You see, they MUST, by law, use the official exchange rate. Once you are over there? Rots a Ruck. Keep a link to the Wall Street Journal on your laptop. At least then you'll know how much you are being screwed.

[RallyJon]

You see, they MUST, by law, use the official exchange rate.

LOL! No. There is no "official" exchange rate. If you look on Oanda.com, you'll be lucky to get within 4% of that rate as a retail (i.e., you don't have $100k on deposit at their bank) customer.

But yes, then you'll know how much you're being screwed.

[pwd72s]

Originally posted by RallyJon
LOL! No.

Really? Times change...so when did that law change for USA banks? I checked the exchange rates in the WSJ. Then I walked to the FDIC insured bank I used at the time. I gave 'em greenbacks, and according to the exchange rate published, I got the same exact same amount of money handed to me, converted to the Swiss Franc currency of the day... I figured that was best, since at the time, the Swiss Franc was the only european currency that was at least partially backed by gold. Also, for this trip, I wasn't sure where in Europe I'd want to tour. RallyJon, would you care to explain more? Thing may be much different today.

[rhk109]

Just checked with my bank. They can order euros but charge a $15 fee. They recommended using my ATM card in foreign countires to get the best rate.

[white87911]

I 2nd the ATM idea. Just spent 2 weeks traveling England. Spent 2 weeks there last year and 2 weeks the year before. I always used my ATM card and the rates were much better than the money shops charge, or even at a Bank over there. Atm fee's were $1.50.

Definately call your bank in advance and let them know your are going.

[Joeaksa]

I travel quite a bit and always keep a few bux of local currency with me but otherwise hit the ATM when we get in the hotel. The rate is good and its convenient. The charge that most banks hit you with here in the states is pure BS.

JoeA

[rhk109]

Is there any trick to using a foreign ATM machine? Are they just like ours? Are they in English?

Any tips like don't use the ATM's in the airport or train station.

[einreb]

Press 1 for english.

[white87911]

ATMs work just the same as they do over here.

[MikeSid]

I recently heard that American service personnel get the best exchange rate by purchasing currency at the base. The suggestion was have a friend in the military buy your currency for you. I have no idea if this is truth or rumor, but if I were going abroad for any extended length of time, I'd look into it. It does occur to me that if true I would imagine the military would have some pretty strict rules about using this benefit simply to prevent profittering...which makes me lean toward rumor, rather than truth, but nonetheless worth posting I believe.

[Decolliber]

I just bought Peruvian nuevo sols from Bank of America web site. No fee but you have to pay for over night fedex.
Going on a 4 day hike to Machu Picchu and then to Amazon. My son will be selling the Carrera if I do not return. Shining Path becoming active again ...

[Revvin 911S]

There is no such thing as an "official" exchange rate. By law, the US has a floating exchange rate. This means that it is market driven, so depending on the supply of and demand for our currency v. the same for the foreign, the rate can change at any given second.

For example: A foreign country, lets say Britain, offers a return on government securities that is 1% higher then domestic rates. This will stimulate US investors to invest their money in Britain to take advantage of the high interest rates. In order to do this, the US investors need to buy pounds, so they supply dollars, and demand pounds. This affects exchange rates, making pounds relatively more expensive since there is now an increase in demand for pounds, and an increase in supply of dollars on the foreign exchange market. Your dollar now buys fewer pounds. This is happening all day, and people get paid large amounts of money to stare at a computer all day tracking these changes, and purchasing or selling in order to make money. You will not be able to keep up with the professionals. As stated before, just go and have a good time, and try not to think about how badly you are getting "screwed". If you have a good time, that is worth losing a little bit on the exchange rate.

[Zeke]

I know nothing of currency exchange, but the topic came up, so I will ask about this "official" exchange rate. Seems like that is what Bush is after China about, they won't let thier yen, or whatever they have, float against the dollar.

Someone enlighten me.

[Revvin 911S]

I know nothing of currency exchange, but the topic came up, so I will ask about this "official" exchange rate. Seems like that is what Bush is after China about, they won't let thier yen, or whatever they have, float against the dollar. Someone enlighten me.

I shall do my best, though I make no guarantee. Countries have two options with regard to currency exchange rates: fixed or floating. Ours is floating, as per my example above. What China has done is to peg their currency to ours, so that a set amount of Yen is always worth a dollar. I am not sure if it is 1 to 1 or not, but for conversation sake lets pretend it is. So no matter what happens, 1 Yen will always be worth 1 Dollar. This is usually done in developing countries to add stability to their currency. Throughout the world our currency is seen as very stable, so it is a natural choice as a currency to be pegged to. Now here is where the problems start. Every country has economic ups and downs. In our country we rely on the FED and the government (please note that contrary to popular belief, they ARE relatively separate. Yes, they are related, but the government does not run the FED) to help regulate these ups and downs and to try and steady them into a relatively smooth upward (hopefully) slope. There are a few options available to them. The government can either raise or lower taxes, or raise or lower government spending. In the end it doesn't really matter which they do, the long term result *should* be the same. Who gets the benefits first in those examples is a topic of much debate. Doing one of these two things is known as Fiscal Policy. The FED also has tools it can use. They can raise or lower the reserve requirement, which is the % of deposits that banks must keep on hand. Raising this rate mean banks have less money available to loan out, thus shrinking the supply of loanable funds, and causing the interest rate to rise. The FED can also raise or lower the Discount Rate, which is the rate at which the FED loans money to its member banks. Raising or lowering this rate will also affect general interest rates. The last tool that the FED has is to affect the money supply. They do this through the buying and selling of Treasury Bills, Notes, and Bonds, commonly known as t-bills. When the FED buys t-bills, they increase the money supply since they are supplying money to purchase the bills. When they sell bills, they are decreasing the money supply since people are giving them money to purchase the bills, and this money is kept out of circulation. These tools of the FED are known as Monetary Policy.
OK now this is the tricky part with a fixed exchange rate. Let’s go back to the US/Britain example. Let’s also say that the US economy is on a down turn, so the FED wants to implement expansionary Monetary Policy, so they buy t-bills, putting more dollars into circulation. On the currency market, there is now an increase in the supply of dollars, which makes dollars less valuable, and they exchange rates will adjust accordingly. Now what happens to China in this situation? Let’s say they are in a similar situation, and need to expand. If they decide to expand their money supply via buying securities or by printing more money, then they too have in creased their money supply. The problem being that they have fixed their currency to ours, and as such the exchange rate can not adjust to equilibrium, even though there is pressure to do so. Let’s use simple numbers. In the US there is $100 in circulation. In China there is also 100 Yen, we have a 1:1 exchange rate, everything is great. Chinanow expands, and prints another 100Y. Exchange rate should naturally move to 2:1, but it can’t. If left alone, this can eventually completely undermine a countries currency value, making their currency worthless. This is what happened in Argentina. They pegged the Peso to the Dollar at a 1:1 ratio. They then printed ALOT of money, in secret, and managed to keep it hidden for a while. Eventually it was noticed that there were a lot more Argentinean Pesos going around then there was supposed to be, word got out, and now there Peso is almost worthless.

I have no idea, nor do I pretend to know, what President Bush is after with regards to other countries. Nor to I know how well China is managing their currency. Having your currency pegged to a standard strong currency is not inherently bad. It becomes bad when there is pressure for the rate to move, and the country does not do something to compensate for it. Remember all of our other tools: taxes, gov spending ect. The biggest problem occur when a country pegs its currency, keeps the exchange rate constant, then prints a lot of money without regard to the consequences. It will always catch up, and in this situation, their currency will always fail.

[Zeke]

Then let's fight dirty and print more money! We can both go down together. With that, the rest of the world is going to be high centered. (I'm assuming that China's economy has grown to the point where it makes a difference in the world economy and that the value of it's GDP is threatening most developed countries.

I wonder if anyone read the piece in Autoweek about Luca Di Montezumolo (sp?) hawking Italian cars as "the right thing to do" ?? Jeez, if we could only get Americans to buy American, but that's another topic.

[Revvin 911S]

I don't think its so much that China's GDP has grown to the point it is "threatening" any coundtries. Its more that for all practical purposes, China has an infinite amout of people. And as there economy grows, and their standard of living increases, they will start to demand more products. This will make them a large player in terms of importing products, instead of just exporting them, such as right now.

I am assuming that our conversation is all in good fun.

Jeez, if we could only get Americans to buy American, but that's another topic.

Statements like this make my head hurt. There is no reason to buy American simply because you live in America. This kind of thinking ties in directly with people thinking outsourcing is inherently bad as well. It is difficult to teach several semesters of Economics in one relatively short post, and I am sure to get flamed for this, but here goes anyway.

I want you (this would be anybody that reads this post, and wants to take the time and effort to play along) to stop for a moment and think about the shirt you are wearing. Why did you buy that shirt? Do you like it? Does it fit your style? Is it comfortable? Did it fit you budget? In short; when you went shirt shopping, did you look for the ugliest shirt you could find that was also the most expensive, or did you look for the shirt that you liked the best for the least amount of money? I would be willing to bet that for most people (lets call them rational consumers); the second option was their choice. Does buying this handsome shirt at the lowest cost possible to you make you a greedy capitalist pig, or does it make you a smart, informed buyer? Again, I think that most people would say a smart, informed buyer. Why then, when companies do this EXACT process, does everybody think they are horrible? Companies out source to lower costs, which in turn lower prices, which in turn benefits us, the consumers. Now wait, before anyone goes off saying if nobody has a job we can't buy products anyway, let me tackle one subject at a time. I am aware that many people think that if a company saves money buy lowering costs, they will not lower prices. Instead, they will continue to charge a high price, reaping massive profits. This is not the case in most situations. They simply cannot do it. If there is a particular industry that finds a way to lower costs, and they do not lower prices, they will be making large profits. Well, what attracts new firms into an industry in the first place? Profit. So if there is an industry that is making large profits, outside firms will be induced to enter, and begin making this product. New firms mean a larger supply. A shift in supply means prices must go down. They MUST go down. If they do not go down, producers will be left with a surplus of goods, and will then lose money. This process of firms entering the market will continue until firms in this industry are no longer making a huge profit, and instead are making a "normal" profit. So we now know that if a firm finds a way to lower its costs, this is passed on to consumers through a higher quantity of goods at a lower price.

Outsourcing. Just saying the word makes people’s hearts beat faster and foam start to fleck around their mouths. A purple hue can even be seen crawling up some people throats to slowly consume their faces as the blood vessels in their eyes strain. But wait: are companies out sourcing the problem, or is it the American workforce? The head of the Economics department at MIT, one of the top Econ schools in the country, once said, "If you have third world skills, you will work for third world wages". This is what outsourcing is all about. America is just not competitive when it comes to producing certain goods, and you know what? That is just fine. The concept that is being lost is that of specialization. Instead of each country trying to produce ALL the good and services that the countries consumers want, it is much more efficient for them to only produce those goods for which they have a comparative advantage, then trade. There are people in Asia that will work all day for a tiny fraction of what American workers will work for. Let them. In fact, give them every job that they have the skills to do, and let them produce those products at a low price. Now, let us concentrate on what it is we can do better. Think about the educations systems in Asia, and here. No comparison. In fact, our colleges are some of the best in the world. So use them. Get educated. Learn to do something that nobody in a third world country can do. The problem is not that American companies are trying to lower costs by outsourcing. The problem is that the American workforce can not, or is not willing to become educated. For the year 2004 the Bureau of Education reported that only about 1/3 of people who enter high school will ever receive a college degree. 1/3. We are a country that has some of the top schools in the world, yet less then 1/3 of us will ever receive a degree. And that’s just an undergraduate degree; the numbers are even smaller for Masters or PhD’s. Get your skills above those of a third world worker, and your job will not be outsourced. Yes, some tech jobs are being outsourced as well. Again, this does not mean that the company is bad. It means that American workers are not competitive in that field. Tech support gets brought up quite often. When you call Dell or somebody you often get a person in India. Well let’s look at this. Tech support workers in America often have very little or no educational training. Maybe a certificate program or something, but rarely a college degree. For a quarter of the price you can get a person in India who has a PHD or Master degree in computer science or engineering. I am sorry, but it is a no brainier. The companies can purchase WAY more for WAY less. Now instead of getting offended by this, we all need to work harder to make ourselves more competitive in the work force. Get rid of the entitlement complex: I’m an American, therefore I deserve a high paying job, many creature comforts ect. No you don’t. The people that work their asses off to become the best at something are the ones who will make it. If you have third world skills, you will work for third world wages.

[RallyJon]

You better learn some sarcastic rhetoric, boy! You can't go posting all that well-grounded sensible talk on Pelican OT.

Quick, before anyone notices, you need to either find religion and buy a gun or gripe about Iraq and post a picture of George Bush and a monkey.