Currency Exchange Problem

Old Oct 14th 2014, 10:06 pm
  #46  
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Default Re: Currency Exchange Problem

Continuing... I did not mean that they pretend that the fee is part of the exchange rate, but rather that they pretend that the fee is the *transaction cost* of doing the transaction when in fact the wide spread on the transaction means that you buy your FX at a rate that is far from fair value. So, the greatest *transaction cost* of doing the transaction is the wide spread (maybe thousands of USD), not the fixed fee (maybe USD100).

My experience with major banks is that they will not do the transaction at a rate close to the mid spread rate.

The proof of the pudding is in the eating. The best way to check this is to call your bank and an FX conversion firm (. <<<snip>>> within minutes of each other. Tell them you have USD400,000 in a USD-denominated account at Lloyds (I am guessing the amount here) and ask them how many pounds they will give you after all fees are accounted for. I am guessing the bank and the FX firm will differ by GBP4,000-5,000 on this amount. The bank will exchange at 2.5% away from the mid-spread rate and the FX firm will convert at 0.675% away from the mid-spread rate.

If you are worried about the firm going belly up during the trade, you could do it in bits. USD100,000 at a time, say. Putting less money at risk per transaction.

Last edited by Jerseygirl; Oct 15th 2014 at 12:15 am. Reason: Rules remived
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Old Oct 14th 2014, 10:20 pm
  #47  
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Default Re: Currency Exchange Problem

I will probably use a FX company when I eventually get it here. I think your figures are about right for the difference between the bank and FX co rate based on research so far.
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Old Oct 14th 2014, 10:28 pm
  #48  
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Default Re: Currency Exchange Problem

Originally Posted by finance View Post
Continuing... I did not mean that they pretend that the fee is part of the exchange rate, but rather that they pretend that the fee is the *transaction cost* of doing the transaction when in fact the wide spread on the transaction means that you buy your FX at a rate that is far from fair value. So, the greatest *transaction cost* of doing the transaction is the wide spread (maybe thousands of USD), not the fixed fee (maybe USD100).

My experience with major banks is that they will not do the transaction at a rate close to the mid spread rate.

The proof of the pudding is in the eating. The best way to check this is to call your bank and an FX conversion firm within minutes of each other. Tell them you have USD400,000 in a USD-denominated account at Lloyds (I am guessing the amount here) and ask them how many pounds they will give you after all fees are accounted for. I am guessing the bank and the FX firm will differ by GBP4,000-5,000 on this amount. The bank will exchange at 2.5% away from the mid-spread rate and the FX firm will convert at 0.675% away from the mid-spread rate.

If you are worried about the firm going belly up during the trade, you could do it in bits. USD100,000 at a time, say. Putting less money at risk per transaction.


Or of course do it in smaller lumps and with different firms. Takes a bit of time but the return per hour is quite good

Last edited by Jerseygirl; Oct 15th 2014 at 12:16 am. Reason: Edit to quote
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Old Oct 14th 2014, 11:12 pm
  #49  
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Default Re: Currency Exchange Problem

Sally another advantage of using a FX company is that you can avoid opening a costly and time consuming foreign currency denomination account as you would need with the bank. Simply send the USD funds direct to the fx company's USD account and they will convert to GBP for you. As another poster mentioned as long as the FX company has U.S and UK office and you are a resident of either it shouldn't be a problem.

Like purchasing anything the more research you do and the more knowledge you obtain the better the deal you will get. Currency is no different.
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Old Oct 15th 2014, 6:45 pm
  #50  
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Default Re: Currency Exchange Problem

In the meantime, the £/$ keeps going down - mid-rate below $1.59.

(Please, no nit-picking on whether it is going "down" or "up").
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Old Oct 15th 2014, 8:15 pm
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Default Re: Currency Exchange Problem

Originally Posted by dunroving View Post
In the meantime, the £/$ keeps going down - mid-rate below $1.59.

(Please, no nit-picking on whether it is going "down" or "up").
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Old Oct 15th 2014, 8:19 pm
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Default Re: Currency Exchange Problem

Originally Posted by MattAus2014 View Post
Sally another advantage of using a FX company is that you can avoid opening a costly and time consuming foreign currency denomination account as you would need with the bank. Simply send the USD funds direct to the fx company's USD account and they will convert to GBP for you. As another poster mentioned as long as the FX company has U.S and UK office and you are a resident of either it shouldn't be a problem.

Like purchasing anything the more research you do and the more knowledge you obtain the better the deal you will get. Currency is no different.
Still have the Wells Fargo problem to deal with though.
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Old Oct 15th 2014, 10:38 pm
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Originally Posted by Sally Redux View Post
Still have the Wells Fargo problem to deal with though.
Sally what U.S state are the funds in and can you ID yourself (drivers license, utility bill)? From that state.
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Old Oct 15th 2014, 11:16 pm
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Originally Posted by MattAus2014 View Post
Sally what U.S state are the funds in and can you ID yourself (drivers license, utility bill)? From that state.
California. I am going to try this Lloyds route, if that fails I'll come back.
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Old Oct 15th 2014, 11:39 pm
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Originally Posted by Sally Redux View Post
California. I am going to try this Lloyds route, if that fails I'll come back.
No problem. If you can do domestic transfers from Wells Fargo we may be able to help.

If not good luck with Lloyds. Hope it all works out!
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Old Oct 16th 2014, 12:08 am
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Originally Posted by MattAus2014 View Post
No problem. If you can do domestic transfers from Wells Fargo we may be able to help.

If not good luck with Lloyds. Hope it all works out!
Thanks!
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Old Oct 16th 2014, 11:05 pm
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Well that was fun. Transferred it to my son, and he's just been in to WF to wire it to Lloyds.

Apparently the employee said, "I've never done this before" which was a great start. Then they asked him a lot of security questions which son said were kind of odd trick questions. Then they rang me up to confirm. I suppose they do have to check but it was kind of tense. Money has disappeared into the ether so hope it's going to turn up in the right place.
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Old Oct 17th 2014, 7:42 am
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So did you take my advice after all?
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Old Oct 17th 2014, 8:14 am
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Originally Posted by fulwood View Post
So did you take my advice after all?
Yes! Hopefully if it works it will be quicker than depositing a cheque, which apparently takes 6 weeks to clear.
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Old Oct 17th 2014, 8:25 am
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It's not a million dollars, but this keeps running through my mind

James Brown – Cant Take It With You (The Breakbeat Junkie Remix) |
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