# How to decide when to buy a foreign currency



## PoundMan (23 Dec 2022)

Good evening folks,

As someone who regularly transfers money between Ireland and the UK, I am interested in trying to get the best value exchange rates.
I noticed that a number of platforms allow you to set a rate alert so that you are notified when exchange rates hit your ideal rate.
My question is, how does one decide upon what that ideal rate should be? Do you look at the average for a particular period (days, weeks, months, years) and set it at an above-average rate? I'm not clear on how one decides on the best ideal rate that is still realistic.
TransferWise (now known as Wise) used to have a rate alert feature that would alert you when the exchange rate reached a two-week high but they seem to have removed that for some reason which is a shame.


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## Brendan Burgess (23 Dec 2022)

Speculating on currency movements is pointless. 

Exchange the currency when you need it.

Unless, you have a very large exposure which you might like to hedge.

Brendan


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## mct1 (23 Dec 2022)

When we transfer money from our UK accounts to here we use CurrencyFair which works, I think, in a similar way to TransferWise. We have a CF account each and assuming we're re not in a hurry we'll choose a higher, more favourable exchange rate to the current one and just wait. 

It's never ever failed, usually only takes a day or two, and obviously the more money you're shifting, the more you'll gain. Mostly we then move the exchanged amount to BOI but himself will sometimes play the waiting game by transferring say €10-20K back and forth between Sterling and Euro over months, and making a nice little profit in the process! There's no speculation as such, just patience and knowing your way round the CF exchange system.m

Oh and €60 for each party if you "refer a friend" and they transfer at least €2000 within a time limit of 7 days. If anyone needs a friend I'm up for it.


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## ClubMan (23 Dec 2022)

PoundMan said:


> TransferWise (now known as Wise) used to have a rate alert feature that would alert you when the exchange rate reached a two-week high but they seem to have removed that for some reason which is a shame.


I thought that they still had it - their help still mentions it - but I was unable to see it on the app earlier. Maybe it's a feature of a business or other paid account? Or is this it?








						Exchange Rate Alerts | Rate Notifications by Wise
					

Check the latest real mid-market rate. Get free exchange rate alerts via email and never miss an update.




					wise.com


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## PoundMan (23 Dec 2022)

ClubMan said:


> Or is this it?
> 
> 
> 
> ...


Yes that's it but no longer shows the option to be alerted when the rate reaches a two-week high. I've emailed Wise to query it as from reading old reviews it definitely used to be a feature so it would be a shame if it's totally removed given how useful it would be.


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## PoundMan (23 Dec 2022)

Brendan Burgess said:


> Speculating on currency movements is pointless.
> 
> Exchange the currency when you need it.
> 
> ...


I understand what you are saying but I just found that there are loads of platforms offering rate alerts yet very little information or advice on how to best select an ideal rate whilst still remaining realistic and obtainable.


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## ClubMan (23 Dec 2022)

PoundMan said:


> I understand what you are saying


I'm not sure that you do...


PoundMan said:


> but I just found that there are loads of platforms offering rate alerts yet very little information or advice on how to best select an ideal rate whilst still remaining realistic and obtainable.


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## Gordon Gekko (23 Dec 2022)

Speculating on currencies is a mugs’ game.


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## Pinoy adventure (24 Dec 2022)

Once it hits a certain limit you’re happy with.


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## LosLobos (24 Dec 2022)

Gordon Gekko said:


> Speculating on currencies is a mugs’ game.


Wasn't this how McManus made his millions? Soros too?  I agree ordinary-Joe's have no business speculating here but those with certain expertise can find it useful.


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## Gordon Gekko (24 Dec 2022)

LosLobos said:


> Wasn't this how McManus made his millions? Soros too?  I agree ordinary-Joe's have no business speculating here but those with certain expertise can find it useful.


Hmmmmm…


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## PoundMan (24 Dec 2022)

mct1 said:


> When we transfer money from our UK accounts to here we use CurrencyFair which works, I think, in a similar way to TransferWise. We have a CF account each and assuming we're re not in a hurry *we'll choose a higher, more favourable exchange rate to the current one and just wait.*
> 
> It's never ever failed, usually only takes a day or two, and obviously the more money you're shifting, the more you'll gain.



@mct1 do you have any methodology when choosing a higher rate? How much higher than the current rate is realistic and achievable? Given the amount of these platforms that offer rate alerts functionality, I'm just surprised there isn't more guidelines and advice out there to help people make an informed decision on choosing their ideal rate rather than potentially targeting unrealistic rates.


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## mct1 (25 Dec 2022)

PoundMan said:


> @mct1 do you have any methodology when choosing a higher rate? How much higher than the current rate is realistic and achievable? Given the amount of these platforms that offer rate alerts functionality, I'm just surprised there isn't more guidelines and advice out there to help people make an informed decision on choosing their ideal rate rather than potentially targeting unrealistic rates.


You got me thinking about how I decide what rate to choose. I don't know about the other platforms but CF makes it simple by doing the math for you. Let's assume I want to move £10k from the UK bank account where my pension accumulates to my BOI account. Here is CF's current exchange rates table.

If I want the money quickly I would choose the current exchange rate, or near to it, and take €11,295.

If I'm happy to wait a few days I might, for example, opt for, say, 1.1395 which gives me an additional €100

If there's slightly less hurry I could go for 1.145 which is €150 on top of the current rate. Or choose any rate above that and just wait it out knowing that at any time I can change my choice to higher or lower with just a few clicks. Sometimes I might take the amount of currency waiting for exchange at a particular rate into account (right hand column). That's always higher at the weekend when markets are suspended.

I might keep my eye on it for a day or two, but mostly I just wait for the notification that my rate has been matched. As you see, it's not very scientific, far from being "speculation", and my choice of rate comes mainly from my experience of using the platform. I can see all the transactions I've made with CF over the past 8 years and I'm satisfied I've always got a better deal than I would via the bank for minimal effort (and minimal expertise).


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## ClubMan (25 Dec 2022)

mct1 said:


> As you see, it's not very scientific, far from being "speculation"


Seems precisely like speculation to me.
And all to get maybe an additional c. 0.1% on the transaction.
As others have said, better to just convert the money when you need it.


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## mct1 (25 Dec 2022)

ClubMan said:


> Seems precisely like speculation to me.
> And all to get maybe an additional c. 0.1% on the transaction.
> As others have said, better to just convert the money when you need it.


€100 is 1% and it's actually no effort at all after the first couple of transfers. I move it mostly to keep my UK funds within the bank guarantee so 'when I need it' doesn't usually apply. I appreciate that it's not for everyone - and that there are other ways to view this. I was merely responding to Poundman's question.


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## Pinoy adventure (26 Dec 2022)

mct1 said:


> You got me thinking about how I decide what rate to choose. I don't know about the other platforms but CF makes it simple by doing the math for you. Let's assume I want to move £10k from the UK bank account where my pension accumulates to my BOI account. Here is CF's current exchange rates table.View attachment 6997
> 
> If I want the money quickly I would choose the current exchange rate, or near to it, and take €11,295.
> 
> ...



That’s a pretty cool app.
What is it ?


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## mct1 (26 Dec 2022)

Pinoy adventure said:


> That’s a pretty cool app.
> What is it ?


CurrencyFair


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## NoRegretsCoyote (26 Dec 2022)

mct1 said:


> If I'm happy to wait a few days I might, for example, opt for, say, 1.1395 which gives me an additional €100
> 
> If there's slightly less hurry I could go for 1.145 which is €150 on top of the current rate.


Excuse my ignorance but I've never used Currency Fair.

Does it guarantee you a certain rate at a future point?


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## cloughy (26 Dec 2022)

I'd say it's trying to match up equally and opposite currency trades, so if they have clients selling sterling in x days then look to see what clients want to buy sterling in x days  and take a spread, and close out their positions


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## mct1 (26 Dec 2022)

NoRegretsCoyote said:


> Excuse my ignorance but I've never used Currency Fair.
> 
> Does it guarantee you a certain rate at a future point?


Not exactly. Here's how CF say it works. 
"You set an exchange rate and make an offer in a given currency. In the event that someone else seeks to trade in the opposite currency and accepts your offer, the transaction can then take place. This sometimes allows you to have a higher exchange rate than the official rate."

So basically if you choose a higher than current rate you'll have to wait for your "offer" to be matched. When your chosen rate is matched you'll automatically get your exchange at that rate. Since currency rates go up and down all the time your rate will inevitably be matched sooner or later - that's our experience anyway. Obviously you may want your money sooner, in which case you'll want to revise your choice to a lower rate or decide to take the current rate for an immediate exchange. Your original money's always there until it's exchanged.

This all makes it sound pretty complicated and I'm probably not the best at explaining the technical stuff. But just to illustrate from my own experience of 40+ transfers. (The first few were smaller until I gained confidence.)

I don't watch currency rates but CF will sometimes alert you that now is a good time to exchange Sterling, or else I see in the news that the rate is favourable. That's a good time to go. I like a fairly fast exchange, say a few days, so I usually choose a rate that will give me 1%+ on top of the current rate. In that case I've found that a match usually comes through within 1-3 days. I don't watch the movement of the CF MarketPlace now but you can if you want. Let's just say I'm frequently surprised just how fast matches happen.

Once as an experiment my husband - who was late to CF and initially mistrustful - once chose a crazy high rate and just left the money to rest there in CF to see what would happen. Brexit came, and sterling/euro were all over the place for a long time. I think it was about a year later that he got a notification - his rate had been matched, and a few hundred gained in the transfer. 

But in the end it's just a means to move our pension moneys to Ireland and get the best exchange rate with minimal effort. In the very early days I made a Sterling transfer which hadn't appeared in my CF account. Worried, I rang them at 7.30am, they picked up the phone and together we worked out that my browser hadn't updated because Eir was down - the money was there all the time. True story. For me customer service is king and CF do that well.


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## NoRegretsCoyote (27 Dec 2022)

mct1 said:


> So basically if you choose a higher than current rate you'll have to wait for your "offer" to be matched. When your chosen rate is matched you'll automatically get your exchange at that rate. Since currency rates go up and down all the time your rate will inevitably be matched sooner or later - that's our experience anyway. Obviously you may want your money sooner, in which case you'll want to revise your choice to a lower rate or decide to take the current rate for an immediate exchange. Your original money's always there until it's exchanged.


If I read correctly Currency Fair charges a 0.45% commission whereas something like BoI will charge 0.2% commission plus a margin.

Are you sure you are systematically getting a better rate than you would via a regular bank?


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## mct1 (27 Dec 2022)

NoRegretsCoyote said:


> If I read correctly Currency Fair charges a 0.45% commission whereas something like BoI will charge 0.2% commission plus a margin.
> 
> Are you sure you are systematically getting a better rate than you would via a regular bank?



Pretty sure. I don't dispute those figures, I've seen them too, so it's a valid question. They should equate so people can make a fair comparison but they don't. Let's just compare £10,000 exchanged by CF vs BOI at close of markets on Friday.

In the CF rate table example I showed earlier, £10k at the current market rate = €11,295. Minus €3 transfer fee €*11,292* goes into BOI. A higher rate could easily give me €11,350 48hours later. Again, I know that from my experience. These figures you see are what you get, there's no catch.

Now here is the BOI Foreign exchange currency converter from Friday, set to receive an international transfer of £10k. As you see *€11,181 *goes into my BOI account. I think there's a fee on top but as I'm not sure we'll ignore that.



So when the CF current market rate gives me a minimum of €110 more why on earth would I accept BOIs awful exchange rate? HSBC's is even worse.  It's been interesting for me to look into what and why I use CF and now I'm more sure than ever it was a good move. I hope the OP has gleaned something from this discussion too. I've said enough now.


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## PoundMan (27 Dec 2022)

Great input guys, I just wanted to better educate myself on these things. Since the likes of TransferWise no longer offer an email alert when exchange rates reach a 2-week high, can someone perhaps explain how one would work this out for themselves? Is it just a matter of finding out what last week's high was and then setting an alert for a figure that's higher than that? For example, last week's high was 1.1479 so in order to be notified of a 2-week high would I just set an alert this week for 1.1480?


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## mct1 (27 Dec 2022)

PoundMan said:


> Is it just a matter of finding out what last week's high was and then setting an alert for a figure that's higher than that? For example, last week's high was 1.1479 so in order to be notified of a 2-week high would I just set an alert this week for 1.1480?


You could do that, certainly, but it seems like in theory you might end up setting new alerts every other day should the rate keep rising. You might consider changing your approach and signing up for a specific, more ambitious rate alert - for example you could choose the three month high which was 1.1650 on Dec 2nd, or something else in between. Just a thought. I don't use rate alerts myself but maybe I should.

Btw free currency apps like Xe will set rate alerts for those not registered with a money transfer site.


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## jpd (28 Dec 2022)

In the past 12 months, the EUR/GBP rate has fluctuated betweena low of 0.82 on 4th March 2022 to a high of 0.90 on 24th Sepptember 2022

So if you can afford to wait for the proceeds, yes, you can "speculate" that the rate will improve in the next few days or weeks

It is as likely to go down as to go up, so the time taken to reach your target will vary from 0 to whenever. Statistically, it will reach your target at some date as the fluctuations are random
Here's a graph of the closing exchange rate over the last 5 years


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## PoundMan (28 Dec 2022)

mct1 said:


> You could do that, certainly, but it seems like in theory you might end up setting new alerts every other day should the rate keep rising. You might consider changing your approach and signing up for a specific, more ambitious rate alert - for example you could choose the three month high which was 1.1650 on Dec 2nd, or something else in between. Just a thought. I don't use rate alerts myself but maybe I should.
> 
> Btw free currency apps like Xe will set rate alerts for those not registered with a money transfer site.


The money needs to go from my UK bank account into my Irish bank account before January 1st, so I probably have little choice but to just accept the current rate. But definitely next year when transferring another lump sum I will try to be a little more strategic about things.


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## mct1 (28 Dec 2022)

You'll


PoundMan said:


> The money needs to go from my UK bank account into my Irish bank account before January 1st, so I probably have little choice but to just accept the current rate. But definitely next year when transferring another lump sum I will try to be a little more strategic about things.


Tomorrow morning then to be on the safe side. Ah well, next time you can be prepared.


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## peemac (30 Dec 2022)

mct1 said:


> Pretty sure. I don't dispute those figures, I've seen them too, so it's a valid question. They should equate so people can make a fair comparison but they don't. Let's just compare £10,000 exchanged by CF vs BOI at close of markets on Friday.
> 
> In the CF rate table example I showed earlier, £10k at the current market rate = €11,295. Minus €3 transfer fee €*11,292* goes into BOI. A higher rate could easily give me €11,350 48hours later. Again, I know that from my experience. These figures you see are what you get, there's no catch.
> 
> ...


That's the exchange the bank charges to the occasional foreign exchange customer. If you do any regularity of transfers you can negotiate a margin over mid point.

I'm with AIB and have a 0.3% margin on sterling transfers + €15 fee. It's programmed into the online system, so automatically applies.

I don't do huge transfers - it was circa £300k a year when it was first negotiated.


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## Gordon Gekko (31 Dec 2022)

Within the banks, they’ve a technical term for people who speculate on currencies.

It’s ‘idiots’.


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## ClubMan (31 Dec 2022)

Gordon Gekko said:


> Within the banks, they’ve a technical term for people who speculate on currencies.
> 
> It’s ‘idiots’.


Yeah, because bankers are infallible and never do stupid things?


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## Gordon Gekko (31 Dec 2022)

ClubMan said:


> Yeah, because bankers are infallible and never do stupid things?


Both can be true…people punting on currencies can be idiots and bankers can be fallible.


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## PoundMan (1 Jan 2023)

mct1 said:


> Tomorrow morning then to be on the safe side. Ah well, *next time you can be prepared*.


@mct1 I'll be doing another transfer again from GBP to Euro in 2023 but this time I have the advantage of being able to wait the full year on a particular rate. Should I settle for something like £1=€1.17 which was the average for 2022 or should I be aiming for something more ambitious like £1=€1.21 which was the highest in 2022?


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## jpd (2 Jan 2023)

You might as well ask 
Nearly Perfect is running in the 3pm race in Plumpton today - odds of 15/2 - should I back it ?


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