How to forward buy Euros?

[Whitelighter]

And what rate am i likley to get?

Looking at making a significant purchase in euros so it makes sense to forward buy a rate. I understand the priciple is you pay a deposit and then lock in todays rate for up to 24 months, but despite being quite a bit of info on the web that suggests this is a good idea I've yet to find a way o doing it that also has a transparent rate attached.

 

[davidwf]

Did just that a couple of months ago, I used HiFX the rate I got for 10 months was about 0.02 down on their current Euro rate at the time of purchase. If you are going to forward buy for 24 months I suspect that they will charge more because their risk is greater.


I forward bought because of the election next May and one thing the market hates is uncertainty and I'd rather not gamble on rates.

 

[Portofino]

And what rate am i likley to get?

Looking at making a significant purchase in euros so it makes sense to forward buy a rate. I understand the priciple is you pay a deposit and then lock in todays rate for up to 24 months, but despite being quite a bit of info on the web that suggests this is a good idea I've yet to find a way o doing it that also has a transparent rate attached.

http://www.xe.com/currencyconverter/

Have a look at these in particular get the App on your tablet / device set up .
You can see 1M 3M 1Y etc trends .
We move £ from uk to € and Sfc all the time .
€ rate is improving ,ie £ is getting stronger buying more ,so maybe hold fire until closer to buying ?
PIGS Defo great deals to be had especially Italy .I mean great deals I paid less than 50 % of advertised price for an ITAMA -Broker initiated price to get me on a plane to view l + other incentives.
Similar experiance with Greek broker ,but Athens basically too far and plenty of what I was after in Italy .
I guess after next election in UK rates trend will either cont to improve or go down ,depends who,s running UK economy .
What boats have you short listed ?

 

[Bertramdriver]

I use Caxton FX. outstanding service, easy to use and good forex rates. You can buy forward at good rates and then access your funds via their Visa card as per a normal credit card, or make large payments through their (very efficient) swift/IBAN payments system on line. Good for boatyard fees.
I switched to them after getting mugged in Pireaus Port and losing €5000 cash.
Caxtonfx.com

 

[beebok]

We have used Hifx for a number of years.Our current bank is Barclays and we opened a Euro account to buy boats in Holland and Germany which was ok,but for day to day purchases it was next to useless as they would not issue a debit card.So we carried cash on the boat stored in different locations.
Not the best solution and couple of years back I found that Lloyds offer a current account with a debit card we still use Hifx and deposit in our Euro account.
It is so straight forward and easy,just call Lloyds they are based in the Isle of Man and open an account.
I believe there are other companies offering debit type cards know.

 

[benjenbav]

Vote Lib Dem in May.

 

[rwoofer]

And what rate am i likley to get?

Looking at making a significant purchase in euros so it makes sense to forward buy a rate. I understand the priciple is you pay a deposit and then lock in todays rate for up to 24 months, but despite being quite a bit of info on the web that suggests this is a good idea I've yet to find a way o doing it that also has a transparent rate attached.

Are you about to lose your status of ex-boater??

 

[Bertramdriver]

Vote Lib Dem in May.

Clearly a lemming who enjoys swimming

 

[Nick_H]

I found that Lloyds offer a current account with a debit card.

Didn't realise that, thanks. I had the same issue as you with Barclays, so opened a French bank account, but I get £200 a year in fees. Are there any monthly fees on the Lloyds account?

Whitelighter, you can use your bank or a specialist FX agency, but normally you can only buy 12 months ahead. It may be possible to to go forward two years, but it's not usual.

The rate will be the current FX rate plus a spread, the latter will depend on how much you are exchanging, but can be a fraction of one percent if the amount is big enough, though I'd guess its more likely to be 1-2% at average boat value levels.

Obviously the bank carries a risk that you won't complete if the market moves away from you, so you'll either pay a chunk now, or will need a credit line from them.

 

[benjenbav]

Clearly a lemming who enjoys swimming

To avoid confusion: I shall not be voting Lib Dem anytime soon.

 

[Anders_P42]

I used Torfx to buy boat euros. I played them off against RBS market place to get better rate. They will allow forward purchase, but I doubt they will cover 24 months, far too risky.

 

[beebok]

With Lloyds you need 2500euros balance then no charges that money earns any of us nothing so for me its a good deal.

 

[Nick_H]

With Lloyds you need 2500euros balance then no charges that money earns any of us nothing so for me its a good deal.

Thanks

 

[Jegs]

Just a thought, is there not a risk that the Euro might not exist in 24 months time? Although it may be that Latvia joining today may strengthen the EZ.

ATB,

John G

 

[Whitelighter]

Thanks all,

Just to be clear I don't need/want 24 months - 6 months would probably suffice. I just understood from limited reading that 24months seemed to be the absolute limit.

 

[gjgm]

That isn,t quite right Nick.The forward rate is the current rate plus,minus the interest rate differential of the two currencies relative to the current rate and the period in question.
In effect you are doing a current exchange and the lending one currency and borrowing the other.So in this case you are lending euros at zero,or minus rates in fact ,and borrowing gbp back at 0.50

 

[EugeneR]

Use XETrade which, in all my experiences over many years / transactions, offers the lowest buy / sell spreads and commissions overall. I've only used them for spot i.e. immediate transactions, but have no reason to believe that their forward rates should not be as competitive.

Alternatively, use a CFD platform e.g. provided by CMC Markets and place a buy / sell contract for the amount you are looking to receive / spend. The profit / loss should then offset the amount you will have to pay more / less when you purchase the currency in x months, effectively hedging / locking the current rate without any significant commissions etc. You don't have to put any money down, but any loss on the contract - which you will get more later - will have to be made good on a day to day basis. Still, it gives you the freedom e.g. to lock in maybe 50% of the value of the transaction, change things along the way, etc.

 

[bedouin]

And what rate am i likley to get?

Looking at making a significant purchase in euros so it makes sense to forward buy a rate. I understand the priciple is you pay a deposit and then lock in todays rate for up to 24 months, but despite being quite a bit of info on the web that suggests this is a good idea I've yet to find a way o doing it that also has a transparent rate attached.

To be clear - a forward contract is for a fixed amount, fixed rate, fixed time. That is pretty cheap, and the rate you will get is close to the current Euro spot rate.

If you don't know exactly how much and when then you cannot enter into a fwd contract - you are talking about an option - and those are too expensive for the sort of transaction you are talking about.

 

[burgundyben]

I had to change a chunk of euros to sterling following a property sale in Spain, I found the sending chunks from euro account to Transferwise and them sending the sterling into my bank was a significantly better rate than using the bank.

It is an unsecured service, so I sent the funds in 10k chunks.

 

[dom]

To be clear - a forward contract is for a fixed amount, fixed rate, fixed time. That is pretty cheap, and the rate you will get is close to the current Euro spot rate.

If you don't know exactly how much and when then you cannot enter into a fwd contract - you are talking about an option - and those are too expensive for the sort of transaction you are talking about.

One clarification and one caution:

Clarification: A forward currency trade is simply a binding commitment to buy/sell a predetermined amount of currency at a predetermined future date. It's pricing is therefore simply a function of the interest differential between the two currencies. Assuming you want to buy euros forward against sterling, the bank/broker you trade with will hedge itself by essentially buying euros today and selling sterling sterling in the required amounts. The bank will then deposit those euros at the prevailing 1Yr euro rate (currently c. 0%) and borrow sterling for 1Yr (currently 0.96%). We should therefore expect the 1Yr GBPEUR forward to be trading at a rate 0.96% worse than the prevailing spot rate. On 31 Dec the spot rate closed at 1.2886 and the 1Yr fwd at 1.2792 (i.e. 0.99% worse), which is roughly in line with that. Forward rates are currently so close to spot rates purely by reason of the fact that sterling and euro interest rates are currently so close to each other; this situation could easily change over the next few months.

Caution: only deal with an institution which is authorised by the UK's Financial Conduct Authority (FCA) and which possesses a clearing agreement with a major international bank. Finally it's well worth shopping around and haggling is normal in the FX business.