Currency Exchange Problem

Old Oct 3rd 2014, 6:48 am
  #31  
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Default Re: Currency Exchange Problem

Originally Posted by MMcD View Post
But if Wells Fargo keep on keeping on keeping you from your money and other entities keep throwing obstacles in the way of getting those funds transferred to you in the UK - your "short stay in rented accommodation" will no longer be that.

Or that's one way of looking at it
Oh well, I have grown fond of the chimes of the clock tower.
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Old Oct 3rd 2014, 11:10 am
  #32  
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Default Re: Currency Exchange Problem

Originally Posted by MMcD View Post
But if Wells Fargo keep on keeping on keeping you from your money and other entities keep throwing obstacles in the way of getting those funds transferred to you in the UK - your "short stay in rented accommodation" will no longer be that.

Or that's one way of looking at it
- hopefully not

One of the beauties of an FX Company is that they deal with your bank at the national level - in this case Wells in the US. That is part of how they reduce fees but also why it should work. Surely Wells has to let you move money nationally?
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Old Oct 3rd 2014, 4:04 pm
  #33  
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Default Re: Currency Exchange Problem

Originally Posted by dunroving View Post
I really hope you don't have to spend money flying there to achieve this (How ridiculous would that be in an era of global finance?)

At least while you are trying to sort this out, the dollar is getting stronger.
... and it's getting even stronger (against the pound) ... who knows, you may be thanking WF in the end.
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Old Oct 3rd 2014, 4:06 pm
  #34  
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Default Re: Currency Exchange Problem

Originally Posted by dunroving View Post
... and it's getting even stronger (against the pound) ... who knows, you may be thanking WF in the end.
you never know.
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Old Oct 3rd 2014, 10:54 pm
  #35  
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Default Re: Currency Exchange Problem

Originally Posted by dunroving View Post
... and it's getting even stronger (against the pound) ... who knows, you may be thanking WF in the end.
There's that, but meanwhile I'm sure Sally's saying "WTF, WF"...

and once the funds are finally pried away and transferred:

you, WF

I admire your equanimity matey - I'd be climbing the walls
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Old Oct 4th 2014, 12:10 am
  #36  
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Default Re: Currency Exchange Problem

Originally Posted by MMcD View Post
There's that, but meanwhile I'm sure Sally's saying "WTF, WF"...

and once the funds are finally pried away and transferred:

https://31.media.tumblr.com/29b4633f...9Sq1s39r4k.jpg you, WF

I admire your equanimity matey - I'd be climbing the walls


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Old Oct 4th 2014, 5:10 pm
  #37  
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Default Re: Currency Exchange Problem

Sally 99% of Forex used to go through NY and Chicago. I imagine it still does.

Have you thought of asking a NY bank to do it? Even a Forex company there?

When you find one there, then get Wells to trasnfer to NY.

But i imagine you have already thought of that. Just in case though.
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Old Oct 4th 2014, 9:11 pm
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Default Re: Currency Exchange Problem

Originally Posted by bigglesworth View Post
Sally 99% of Forex used to go through NY and Chicago. I imagine it still does.

Have you thought of asking a NY bank to do it? Even a Forex company there?

When you find one there, then get Wells to trasnfer to NY.

But i imagine you have already thought of that. Just in case though.
Wouldn't I have to open an account with them?

All these ideas are gratefully received though. I'm in the process of opening the Lloyds dollar account, see how that goes

Thanks for the moral support to everyone.
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Old Oct 5th 2014, 6:39 am
  #39  
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Default Re: Currency Exchange Problem

Although possibly millions of individuals trade daily on the forex FX market, they are not trading currency but instead are trading currency options. A currency option is a highly leveraged side bet on the direction that two currencies will move in relation to each other with settlement at the end of each trading day in the currency of the option trader.

From my understanding, only financial institution can trade actual currencies on the forex market and that is how XE, Wells Fargo, and other financial institutions make trades for their customers.
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Old Oct 13th 2014, 12:44 am
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Default Re: Currency Exchange Problem

My understanding is that your US bank is sending you a USD-denominated check and you plan to deposit it into a UK-based USD-denominated account from which a conversion to GBP will take place. Are you intending to ask Lloyds to convert the money once you deposit the check? Be aware of the following...

If you open a USD-denominated account in the UK at Lloyds you can deposit the USD check into it and then ask Lloyds to convert the USD sum to GBP. It is mechanically feasible. There will be a delay while the check clears and the money is converted and deposited to your GBP-denominated account.

...but (and it is a big but) Lloyds will charge you a *retail* exchange rate. The spread on the retail exchange rate can easily be 5%, and you pay half of this. So, you can easily end up paying 2.5% in transaction costs. For a USD400,000 conversion, you are looking at as much as a USD10,000 cost.

You see, the bank buys GBP at one (low) price, and sells GBP at another (higher) price. In your case, they are selling you GBP at the higher price. The spread between these prices is about 5% for a retail transaction. Fair value is in the middle of this spread, so they sell to you at 2.5% above fair value. (It could be less than 2.5%, but 2.5% is certainly possible and likely.)

For institutional trades (e.g., with investment banks as counterparties), the spread is MUCH lower, and can be tiny fractions of a percent.

This cost for your retail transaction will be hidden from your explicit view because they will just quote the (higher) exchange rate they are using. They view foreign exchange conversions for retail customers as a profit center.

On top of this they will charge you an explicit fee, e.g., GBP25, and they will pretend this fee is the cost of the conversion. In fact, that fee is negligible compared with the spread you face.

I think you have three choices.

1. Proceed with the USD check deposit and conversion and accept that the bank is going to extract $10,000 from you in the process (assuming a USD400,000 check).

2. Proceed with the USD check deposit but sit down with your in-branch relationship manager and ask that they shade the rate for you. That is, that they narrow the spread. They might get it down to two thirds of what they normally quote retail customers. You lose maybe USD6,500 in the transaction.

3. Once the USD are deposited, use an FX conversion site to make the conversion. Something like <<<snip>>>for example (I am not recommending them; I have not used them though a friend used one of their mirror companies in a different country). They have tighter spreads and you would likely lose only $2,500 in the process (compared with $10,000 at your bank). <<<snip>>>still make money off of you b/c they trade with other institutions at very tight rates and so they keep much of the $2,500 for themselves, but they specialize in this (which keeps costs low), whereas your bank just does it as one of many activities.

Finally, be 100% clear with your US bank that they are not to send you a GBP-denominated check. Put it in writing that no conversion is to occur b.c the destination is a USD-denominated account. If you do not make this clear, and they convert for you in advance, then your US bank will be keeping that 2.5% for themselves from Day 1.

Ask again if anything is not clear.

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Old Oct 13th 2014, 1:19 am
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Default Re: Currency Exchange Problem

Yes, Lloyds have already given me a sample of their 'live rate' which was pretty disappointing.

I am extremely nervous about it all at the moment but will report back.
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Old Oct 13th 2014, 7:16 am
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Default Re: Currency Exchange Problem

Deposit a cheque or the sending bank will prefer a wire transfer probably to a lloyds us dollar account nased offshore (iom in lloyds case) , frankly i would be tempted to leave it there if its not needed, the rate will imho get better for us to uk later, but if needed setup an acccount with 2 of the uk based fx specialists (martins money saving expert website has recommendations) then on the day call your dealers and ask for their rate, its all executed live. You pay them within 3 or 5 days from the lloyds dollar ac in dollars.

I do this approx annually in the reverse direction for property purchases. Works well, the thing to remember is that although the fx dealers will save you a packet, they arent well controlled so if they go bust while holding your money, you might lose it, so stick with the big recommended ones.

Strange but true, if you instead change it for cash at one of the properly competitive holiday dealers you canget an even better rate for us and uk xfers, i could have saved £5k on 500k, and though entirely legal with the relevant form, imagine walking through cities / airports with a case of uninsured cash...
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Old Oct 13th 2014, 7:20 am
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Default Re: Currency Exchange Problem

You have to setup the fx accounts in advance, anti money laundering means they have to check you out in advance. They will also ask you why you are moving money, they dont care but have to keep records. Xfers bigger than i think 10k get reported to hmrc unless its all offshore.
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Old Oct 13th 2014, 8:37 am
  #44  
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Default Re: Currency Exchange Problem

Originally Posted by finance View Post
My understanding is that your US bank is sending you a USD-denominated check and you plan to deposit it into a UK-based USD-denominated account from which a conversion to GBP will take place. Are you intending to ask Lloyds to convert the money once you deposit the check? Be aware of the following...

If you open a USD-denominated account in the UK at Lloyds you can deposit the USD check into it and then ask Lloyds to convert the USD sum to GBP. It is mechanically feasible. There will be a delay while the check clears and the money is converted and deposited to your GBP-denominated account.

...but (and it is a big but) Lloyds will charge you a *retail* exchange rate. The spread on the retail exchange rate can easily be 5%, and you pay half of this. So, you can easily end up paying 2.5% in transaction costs. For a USD400,000 conversion, you are looking at as much as a USD10,000 cost.

You see, the bank buys GBP at one (low) price, and sells GBP at another (higher) price. In your case, they are selling you GBP at the higher price. The spread between these prices is about 5% for a retail transaction. Fair value is in the middle of this spread, so they sell to you at 2.5% above fair value. (It could be less than 2.5%, but 2.5% is certainly possible and likely.)

For institutional trades (e.g., with investment banks as counterparties), the spread is MUCH lower, and can be tiny fractions of a percent.

This cost for your retail transaction will be hidden from your explicit view because they will just quote the (higher) exchange rate they are using. They view foreign exchange conversions for retail customers as a profit center.

On top of this they will charge you an explicit fee, e.g., GBP25, and they will pretend this fee is the cost of the conversion. In fact, that fee is negligible compared with the spread you face.

I think you have three choices.

1. Proceed with the USD check deposit and conversion and accept that the bank is going to extract $10,000 from you in the process (assuming a USD400,000 check).

2. Proceed with the USD check deposit but sit down with your in-branch relationship manager and ask that they shade the rate for you. That is, that they narrow the spread. They might get it down to two thirds of what they normally quote retail customers. You lose maybe USD6,500 in the transaction.

3. Once the USD are deposited, use an FX conversion site to make the conversion. Something like <<<snip>>>for example (I am not recommending them; I have not used them though a friend used one of their mirror companies in a different country). They have tighter spreads and you would likely lose only $2,500 in the process (compared with $10,000 at your bank). <<<snip>>>still make money off of you b/c they trade with other institutions at very tight rates and so they keep much of the $2,500 for themselves, but they specialize in this (which keeps costs low), whereas your bank just does it as one of many activities.

Finally, be 100% clear with your US bank that they are not to send you a GBP-denominated check. Put it in writing that no conversion is to occur b.c the destination is a USD-denominated account. If you do not make this clear, and they convert for you in advance, then your US bank will be keeping that 2.5% for themselves from Day 1.

Ask again if anything is not clear.
In my experience with Barclays that is not correct. If the amount is large, the rate they will give you gets closer to the mid-rate.

I don't usually have vast amounts to exchange but in 2006 when I exchanged $50k from my US house sale to put a deposit on my house, the rate was only about 1 cent above the mid-rate.

Last week, however, when I had $2,500 wired to Barclays for some overses consulting, they charged me £10 for accepting the wire (on top of the $22 charged by the sending bank), and gave me a rate of $1.67, which at the time was about 6 cents above the mid-rate. They didn't "pretend" the £10 fee was part of the exchange rate, it was stated in the statement I was sent. Banks aren't allowed to "pretend" like that.

Unlike fx services, banks won't as easily give you a live rate for a larger amount. It may be that the bak gave Sally a standrad live rate (depends on who she was dealing with and whether the question was asked about a specific, large amount).

Definitely worth asking the bank about the rate.

Last edited by dunroving; Oct 13th 2014 at 8:39 am.
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Old Oct 13th 2014, 8:59 am
  #45  
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Default Re: Currency Exchange Problem

Originally Posted by dunroving View Post

Last week, however, when I had $2,500 wired to Barclays for some overses consulting, they charged me £10 for accepting the wire (on top of the $22 charged by the sending bank), and gave me a rate of $1.67, which at the time was about 6 cents above the mid-rate.
I think that you should have said 6 cents away from or worse than the mid-rate since they made sterling that much 'stronger' when you were buying sterling - about a 4% spread plus the other charges.

I think that over time the banks' spreads have steadily got worse and worse as they look for more ways to come up with the same money in a world of low interest rates, less lending and less proprietary trading.

My recent experiences with switching currencies (GBP to USD) was that I was charged about .6% (one cent) on the transactions by an FX company (Halo) and I'm very glad I've got into that being my means for doing transfers.

I've every intention of using them if I in due course need to go the other way into Sterling. Apparently this simply involves paying Barclays NY (by their swift) for onwards their London (swift) USD. They would then do the switch and credit my Barclays (GBP).

Last edited by Pistolpete2; Oct 13th 2014 at 10:50 am. Reason: They would then do the switch and credit my Barclays (GBP).
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