Transfer money now or wait?

[P]

We may have found a property in France (need to check a few things out) or we will be back in to the search soon.

We do have a French bank account and, at the moment, exchange rates seem extremely good.

Any views on whether we should go with the current rate and place the money into our French bank account and let it earn a little interest there or, keep it in th UK earning far better interest and 'chance' the rate when we need it.

We have just been quoted a rate of 1.4707 now and 1.4617 in 3 months.

Difficult decisions as I am not really a gambler.

Paul

[tenniswitch]

In my experience, one nearly always guesses wrong about the exchange rate when it comes to transferring funds on any given date.  My advice would be to make the transfer at a time convenient to you and try to be philosophical about the rate.

[Benjamin]

Hi P

Google something like Eurozone Long Term Interest Rates and if you can understand any of the articles quoted there you are probably on your way to becoming a currency guru.

Seriously there are people out there paid zillions to predict trends and even they get it wrong.

Yes the rate is quite good at the moment but as the ECB have just decided to hold the Eurozone interest rates and then the BoE might move upwards again before the end of the year thus strenghtening the pound vs euro then perhaps you might get more for your pounds than now; or not!

Do as Tenniswitch says, unless you fancy a flutter but then you say you're not a gambler. It's never an easy decision for an amateur so best of luck.

Benjamin

[alnmike]

You could use one of the Foreigh Exchange companies, we have used HIFX, and they will allow you to forward buy at a know rate for only a 10% (I think deposit). So you can keep your money in the UK but know what your final cost will be. Just a thought.

[Gardian]

Paul ...............

There are two things to say right from the start:

• If any of us knew exactly what was going to happen with the exchange rates, we'd be sitting on our 100' motor yacht in some Med harbour sipping Krug, rather than furtling around on this website.
• If you opt to buy your currency from a money broker, then the worst thing that can happen (if your purchase falls through) is that you might want to sell your €'s back to them - but that could easily cost you £5k - £10k on a typical purchase, if the £ were to stand still in the interim. (If it fell, you might well lose nothing).

So, buy now or wait?

A couple of weeks ago, I asked the very same question of a 'city slicker' friend who made some enquiries for me re the new contract for our mthly funds tsfr from the UK.  His (their) view was the £ could be expected to weaken in the coming months and that the current high one-forty rates would fall off before very long.

The quote you've just had says it all.  However, for all of us, our natural instinct is to hold off till we're sure that we're ready to proceed with the transaction.

My take is that the rate will hold for a while yet: there was no big reaction to the higher GDP announcements in France & Germany recently.  Hang on, but get your house purchase deal sorted asap, I'd say.

I'm sitting so firmly on the fence, I can feel the splinters ripping my ................... 

p.s. Whatever you decide to do, don't look back and say, "If only."

[Owen]

Hello P,

"My take is that the rate will hold for a while yet................ Hang on, but get your house purchase deal sorted asap, I'd say"

I think this is sound advice to sort out the house purchase as the priority then address the currency issue. Of course the Euro/Sterling cross fluctuates but in 2006 for example it has been nothing like the range in say the Euro/Dollar cross.

Assuming the property deal is going through then with the Interbank rate at around 1.4860 I would buy the Euros at the spot rate. i do not see any great merit in buying forward in your circumstances because what you gain in the higher interest rates on sterling you are clearly going to lose on the exchange rate. Indeed the difference between the spot and forward rate is a reflection of the different interest rates and not really what the financial institution thinks of a future exchange rate. And it is not as if you are planning to move the Euros into yet another currency.

Put your money where your mouth is, I hear you say. All I can say is that when I last did a Sterling/Euro transaction (I have a modest currency portfolio) in December 2005 the rate was almost exactly the same as now. Of course if I had kept kept it in sterling and did the deal now I would have earned more interest than I have done on the Euros deposit. But the Euro is my home currency and ultimately where most of my liabilities lie.

Regards

Owen

[allanb]

I am willing to give you an absolutely reliable prediction about the

sterling/euro exchange rate, one that you can bet on with

confidence.  Are you ready?  Here it is:

It will fluctuate.

This is not an original joke, by the way.  It is supposed

to have been said by the banker J P Morgan, just before the 1929 Wall

Street crash, when somebody asked him what the stock market would

do.  But it's still good advice.