How to decide when to buy a foreign currency

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PoundMan

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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.
 
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.
 
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.
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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?
wise.com

The clever new way to send money abroad

Banks sting you with hidden charges when you send money abroad. But that’s yesterday’s problem. Say hello to Wise, the clever new way to move your money.
wise.com wise.com
 
ClubMan said:
Or is this it?
wise.com

The clever new way to send money abroad

Banks sting you with hidden charges when you send money abroad. But that’s yesterday’s problem. Say hello to Wise, the clever new way to move your money.
wise.com wise.com
Click to expand...
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.
 
Brendan Burgess said:
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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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.
 
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.
Click to expand...

@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.
 
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.
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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.84B9C293-6210-47B8-8FFF-028097407BF8.png

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 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.
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€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.
 
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.

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).
Click to expand...

That’s a pretty cool app.
What is it ?
 
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.
Click to expand...
Excuse my ignorance but I've never used Currency Fair.

Does it guarantee you a certain rate at a future point?
 
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
 
NoRegretsCoyote said:
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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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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