Pound to the €uro

cereza · Post by **cereza** » Fri Feb 06, 2009 6:21 pm

EMM - I can't understand why you would get a premium for forward delivery f/x. I trade in either spot or March delivery and the March delivery is always at a discount so to get 1-17 for August when the spot is below 1-15 seems too good to be true.
The only reason for this that I can think of is that the company you talking to is taking a view and if that was true then I would be careful in dealing with them. The movements in the market are often irrational and violent so I would want cast iron guarantees that such a company will be around in 6 months time. (I assume that they want some sort of security from you?)

Lesley Jean · Post by **Lesley Jean** » Fri Feb 06, 2009 6:32 pm

If you pre-order your euros you do get a better deal

http://www.crowncurrencyexchange.com/in ... GgodgE3s1A

Al Garb · Post by **Al Garb** » Sat Feb 07, 2009 7:17 pm

Forwards deal at either premiums or discounts. Premium forward points must be added to the spot rate, making the forward rate higher than the spot rate. Points are determined by the interest rates in the fixed currency £ and the interest rate in the variable currency €

cereza · Post by **cereza** » Sun Feb 08, 2009 11:02 am

Al Garb
I know how forward exchange rates work but at the moment the sterling/euro rate is at a discount forward and that is why I was surprised at companies offering forward delivery at a premium.
I did some checking and found that some of these firms are actually small businesses out in the sticks. To get the forward rate you have to pay them the sterling immediately and then they will give you the euros later on the date requested. In previous times I can see that these companies could earn interest on the sterling until delivery day which enables them to increase the exchange rate but in the current climate they cannot earn enough interest to make it worthwhile.
I personally would not dream of paying anyone money now for future supply of foreign currency. the risk far outweighs any small gain on the exchange rate.

pato · Post by **pato** » Mon Feb 09, 2009 2:34 pm

cereza wrote:Al Garb
I know how forward exchange rates work but at the moment the sterling/euro rate is at a discount forward and that is why I was surprised at companies offering forward delivery at a premium.
I did some checking and found that some of these firms are actually small businesses out in the sticks. To get the forward rate you have to pay them the sterling immediately and then they will give you the euros later on the date requested. In previous times I can see that these companies could earn interest on the sterling until delivery day which enables them to increase the exchange rate but in the current climate they cannot earn enough interest to make it worthwhile.
I personally would not dream of paying anyone money now for future supply of foreign currency. the risk far outweighs any small gain on the exchange rate.

And with that the risk of insolvency, I try not to pay anyone up front these days. We've had too many contractors going out of business.

cereza · Post by **cereza** » Mon Feb 09, 2009 2:51 pm

[quote="pato"]And with that the risk of insolvency, I try not to pay anyone up front these days. We've had too many contractors going out of business.[/quote]

Right on pato.Trust nobody. I always try to pay on credit card now - at least you have some sort of guarantee.

e-richard · Post by **e-richard** » Mon Feb 09, 2009 3:04 pm

cereza wrote: always try to pay on credit card now - at least you have some sort of guarantee.

... until the credit card company goes bust

Well, after Lehman Bros, Landsbanski etc.... anything IS possible.

cereza · Post by **cereza** » Mon Feb 09, 2009 4:09 pm

[quote="e-richard"][quote="cereza"] always try to pay on credit card now - at least you have some sort of guarantee.[/quote]
... until the credit card company goes bust (unquote)

What ? Not Tescos !! and I get points !

snowytheboy · Post by **snowytheboy** » Mon Feb 09, 2009 4:26 pm

Doesn't matter if the credit card company goes bust as you will owe them money not the other way round.

Bruce Wallis · Post by **Bruce Wallis** » Mon Feb 09, 2009 4:36 pm

Euro/pound was 1:15 to the pound this lunchtime.

cereza · Post by **cereza** » Mon Feb 09, 2009 4:56 pm

[quote="snowytheboy"]Doesn't matter if the credit card company goes bust as you will owe them money not the other way round.[/quote]

Always pay the credit card by the due date - you don't want to pay their interest rates!