Good time to Sell Euros and Buy Pounds?
Some of you may recall my article on the 27th of January.. “Is this a good time to buy euros with pounds?” Well, it transpires that it was. Now the situation has reversed.
The Pound value has dropped against the euro, since that article. We had a case, this week, where a customer may not have been able to complete on his house purchase as the exchange rate had dropped so much that there was a shortfall of a few thousand euros on completion day.
This could have been overcome if the client had bought a Forward contract at the exchange rate that existed on the 27th of January. If he had done this, he would have been sure that he would have had sufficient funds for his property purchase.
So,…. Is it a good time to sell euros and buy pounds? Probably. No-one can say for sure, but it would appear that the pound is as weak as the euro, when compared to the US Dollar and the Yen. The eurozone is still dragging the Greek finance problem around and the Pound is still suffering from a wave of poor economic results. So, some would say that the Euro and the Pound have levelled off. Experience shows that this staus quo rarely remains for long.
The easiest way to look at this is; if you need to change your money at some point and you need to achieve a certain amount, then you have these options:
- Exchange all of your Pounds for euros at today’s rate. This is called a SPOT Contract. It ensures that you fix the rate today and you get your money transferred, to where it needs to be, in good time.
- Exhange some of your Pounds for Euros and risk the exchange rates going in your favour by the time you need to have the rest of the money changed. This is HEDGING in its simplest form. It does mean you can sleep at night, safe in the knowledge that you’ve made sure you don’t lose too much if the rates don’t go your way.
- Exchange your Pounds for Euros, at today’s exchange rate with just 10% deposit. Then pay the balance when you need the money in the future. This is called a FORWARD Contract. This is the way that most of my clients are now exchanging their money. By paying just a 10% deposit, our clients can relax, safe in the knowledge that they have the right amount of money for their property purchase.
Of course, this doesn’t just apply to Pounds and Euros. It applies to any tradeable currencies. It also applies to much smaller amounts than usually needed for property purchases.
Contact me here, for some free advice on how to get the best currency exchange rates to suit your circumstances.
