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How to lock in euro rate for future travel
Old 03-13-2015, 03:34 PM   #1
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How to lock in euro rate for future travel

The US$ sure is on a tear, and probably has a bit more room to rise against the Euro. Parity approaches. All good things come to an end, however, and that rate will not remain forever. I'd like to lock it in for future travel plans, say a year or so from now. What is the best way to exchange a couple of $K into Euros for this purpose? Everbank sells 12 month Euro CDs, but their fees and exchange rates aren't clear, and the currency gain would be taxable income. I'm wondering if there is a way to lock in the rate now, and be able to use it in some future date without any future need to reconvert. Pre-paid debit cards, perhaps?
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Old 03-13-2015, 03:52 PM   #2
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Why not just buy Euros and hold the cash?
That's what I plan to do.
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Old 03-13-2015, 03:52 PM   #3
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Depending on the Euro rate when we're there this summer - we may be bringing more cash home than we have to.... for future trips.
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Old 03-13-2015, 04:18 PM   #4
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I've see the euro in the 0.8 to 0.9 range. Be careful about having recent exchange rates lead you to putting a lot of cash into euros. Buying a little ahead won't hurt. I usually keep 50 to 100 euros to get me from the airport to my first hotel/B&B.
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Old 03-13-2015, 05:23 PM   #5
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Unless you are going to use it the following year, I would think some investment would be best as otherwise inflation will eat up 3% of it per year.

And if you are planning to visit Greece, the Eur might not work there in a few years

Let us know if you find a good unhedged investment in Euro's. Although when I say it that way we are really talking currency trading, which is supposed to be risky.. ?
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Old 03-13-2015, 05:36 PM   #6
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Can you buy Amazon gift cards in a European country? Amazon.eu France maybe?

Qui!

https://www.amazon.fr/gp/product/B00...=sr_1_1&sr=8-1

Now let me try to figure out how that could help...
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Old 03-13-2015, 08:38 PM   #7
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Travel this year.

I had some charges post today. 1.07 dollars to Euro.

I'm paying for my train tickets next week.

Otherwise I would just buy some Euros and hold onto them.

It might take years to reverse - you never know.
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Old 03-13-2015, 09:41 PM   #8
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I've see the euro in the 0.8 to 0.9 range...
That's a long time ago, about 1999-2000. In all our trips to Europe in the 2000s, we were paying more than 1.2 US/Euro, and one time more than $1.35 US/Euro if my memory serves.
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Old 03-13-2015, 10:09 PM   #9
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Originally Posted by Sunset View Post
Unless you are going to use it the following year, I would think some investment would be best as otherwise inflation will eat up 3% of it per year.

And if you are planning to visit Greece, the Eur might not work there in a few years

Let us know if you find a good unhedged investment in Euro's. Although when I say it that way we are really talking currency trading, which is supposed to be risky.. ?
Inflation? 3% per year?
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Old 03-14-2015, 12:35 AM   #10
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Inflation? 3% per year.
Hotel inflation, as the lower rate will cause a rise in tourism, and where the crowds are the prices rise higher than everywhere else.
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Old 03-14-2015, 12:49 AM   #11
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Hotel inflation, as the lower rate will cause a rise in tourism, and where the crowds are the prices rise higher than everywhere else.
We'll see. Europe is really struggling with deflation right now.

If lower exchange rates (easier on exporters) and increased tourism jump starts the European economy, it will be better for all of us.

But I never understood the old ~1.4 relationship between the Euro and USD anyway.
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Old 03-14-2015, 05:26 AM   #12
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Why not just buy Euros and hold the cash?
That's what I plan to do.
This will be my fall back plan.
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Old 03-14-2015, 05:31 AM   #13
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Quote:
Originally Posted by Sunset View Post
Unless you are going to use it the following year, I would think some investment would be best as otherwise inflation will eat up 3% of it per year.

And if you are planning to visit Greece, the Eur might not work there in a few years

Let us know if you find a good unhedged investment in Euro's. Although when I say it that way we are really talking currency trading, which is supposed to be risky.. ?
I agree with Audrey, European inflation is not a major concern right now. Even if it does happen, buying Euros now or later will not affect that, it would only be a reason to travel sooner.

Euro fixed income investments should be easy to find, but that's not what I'm looking for. Investing means there would be future income and capital gain that is taxable income.
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Old 03-14-2015, 05:45 AM   #14
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HSBC bank offers euro accounts in Canada. I would be surprised if it doesn't in the US.
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Old 03-14-2015, 06:03 AM   #15
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It has been about ten years, but when I was buying Brazilian Real denominated CDs from Everbank, I don't recall there being a fee. And I think the exchange rate was close to spot, although I'm sure there was a markup of some bps. I think the currency gain is technically taxable no matter how you do this; it's just that Everbank reports to the IRS.***

Personally, I usually come home with a few hundred Euros which, like 2B, I use the next year to get me from the airport to my hotel. This year, I might bring home a larger amount than normal.

**** Edit to add - After more reflection, if you just spend your euros and never convert back to dollars, there may be no taxable gain.
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Old 03-14-2015, 07:15 AM   #16
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This will be my fall back plan.
The only thing is I don't know how to buy Euros in the US without a poor exchange rate. I can order Euros from Bank of America with "no fees" but their poor exchange rate on the service corresponds to a 5.5% spread!

When overseas, withdrawing Euros from an ATM costs me at most 1% in foreign exchange fees, and using a credt card costs me 0%.

So I guess you have to decide when the spread is worth it.

Someone who has a European bank account, no problem.
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Old 03-14-2015, 07:52 AM   #17
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Goldman Sachs Has Just Gone Super-Bear on the Euro - MoneyBeat - WSJ

Most analysts expect Euro to drop all the way to 80-85 cents by 2017. It looks highly probable that Euro is going down and will continue going down for some time.

I am not sure how much difference it makes for few thousand dollar vacation but if one wants to buy vacation property in EU then timing can make a lot of difference.

BTW nothing stops you from opening bank account in for example Spain and wiring money from US into that account.
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Old 03-14-2015, 08:23 AM   #18
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Interesting.

Quote:
Goldman, which like others has been scambling to keep up with the euro slide, lowered its forecasts for the euro Friday to $0.95 in 12 months, $0.85 by the end-2016 and $0.80 for the end-2017. The previous forecasts were 1.08, 1.00 and 0.90 respectively. It has predicted that the euro would rise against the dollar until last April.
I don't know what Goldman Sach's track record is. I do know they make a lot of bold predictions (and grab headlines).

It's certainly sweet as a tourist. Last year I was paying around 1.30 USD per Euro, even though that had dropped from about 1.4 a few months before my trip. The drop now to well under 1.1 is quite significant on my charges!

Every 5% discount is quite noticeable!
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Old 03-14-2015, 08:26 AM   #19
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Since we're going to Italy next month, I'm quite happy about this situation.
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Old 03-14-2015, 08:31 AM   #20
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Ah - here you go: Top 7 EUR (Euro) ETFs

Now I understand why some M* posters keep mumbling about FXE!

Hey - open a Charles Schwab brokerage account (min $1000). Invest in FXE commision free when you think it's a good time. Open their Investor Checking, and enjoy 0% transaction fee ATM withdrawals when you are in Europe!

Personally I think the Euro dropping against USD is a multi year trend.
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