Buy Euros Far in advance??

This question has come up many times here. I've heard it said that free financial advice is sometimes worth what you pay for it. What is usually concluded is that this is what currency traders do for a living but they do it full time and (I suppose) can afford to lose. Most people here are travelers and not currency speculators and don't feel comfortable getting into currency speculation in connection with their trips. Also, there's a tendency for people who have played and won to let us know, whereas those who played and lost may not reply to a question of this type. However, it's tempting. How lucky do you feel?

Keep in mind that it was 1.6 last 2 years ago, but it 1.18 3 months ago. No one knows what is going to happen. What if one (or more) of the PIIGS default and the Euro tanks? The dollar is the refuge for the world and its value will increase? Likely? About as likely as it is not. Keep in mind, buying in advance forces you to pay commissions which will make the 1.3 higher. I usually just withdraw from ATMs will over there to avoid commissions. No one can tell, but I'd say save your money now and don't sweat it. You'll have a great time not thinking about exchange rates.

It is a sucker play. First, you have no opportunity to purchase Euro at 1.30 or current Interbank rate. The best you can do is around a 5% mark up or about $1.36. Then there is the opportunity cost of your $2,500 of at least another two or three percent which brings your cost to about $1.40. That means the dollar has to weaken by at least another 7 to 8% for you to have a chance at break even before you could save hundreds of dollars. You stated it correctly - it is a gamble. In my assessment there is little reward for the risk you are assuming.

You need a crystal ball or a ouija board. Since most of us are travelers and not financial experts we exchange for euro using ATM's. In 2008 the rate was about $1.50 per euro and last month it was $1.27. I do not fret about the rate...if I want to go I go. Buon viaggio,

My favorite oxymoron is "the foreseeable future." Hands down the best way to get euros is to set up a Capital One money market account with no international fees or transaction fees of any kind. Once there, withdraw the euros as needed. Not only with there be no transaction fees, but you will earn interest on the money that remains in the account. Also, you don't have to worry about traveling around with thousands of dollars worth of euros. The only reason for me to get more than about 200 euros in advance is if the first place we're staying requires cash upon arrival. Good luck.

If any of us actually knew the answer to your question, we wouldn't be on this board, we would be hanging out at one of our 2 or 3 villas in Italy. Impossible to know for sure where the rates will go. What if Repubs win in Nov and markets, here and in Europe, like that and rates go in favor of dollar. What is Fed floods the market with even more with money, as it is doing as we speak, and rates go in favor of Euro as has happened recently. What if by May, Greece and or one or two other small economy Euro countries like Portugal or Ireland defaults or almost defaults and rates really then move in favor of the dollar. Way more than we mere travelling mortals can figure out or predict. If your thoughts on direction of the dollar are right, best bet would be a futures currency buy and if you are right, the profit may pay for the trip.

If you exchange now, you will tie up that money for months and you won't be able to use it. The exchange rate at banks, Forex, etc. is usually terrible, and if for some reason you needed to change it back to dollars you would take another giant hit. I usually just go with the flow. I've seen rates skyrocket, only to see them plummet once again, and this can all happen in a month's time. It's a crap shoot. You will only want to take about 250 to 500 Euro in cash to get you started anyway. Then replenish as you need it from ATMs. Even with the fees, you will get the best (wholesale) exchange rate. When you change at a financial institution, they will charge you the retail rate.

Thanks for your opinions everyone. Just an idea I was tossing around. Think i might take the currency exchange ticker of my browser and quit paying attention to it. :)

One other thing to consider - if you bought Euro's now that money will be sitting under your mattress for 9 months. Leave your US dollars in the bank and at least it will earn some pathetic level of interest. Plus - what if something happens between now and then and you can't go on your trip? Then you'd have $2500 worth of Euros that you can't use and imagine the cost of exchanging them back...

Hey Blair, Here's some more reading for you: http://money.cnn.com/2010/09/23/news/economy/thebuzz/index.htm

I will admit that I saw the low rates in the spring and decided to buy half the euros I would need for my trip in Sep. I had to pay the exorbitant handling fee and ended up with a 1.28 exchange rate. For me, it was a hedge getting half the euros at a known rate. The Euro rose over the Summer and settled near 1.28 in Sep. By the time I paid the E5 ATM access fees and the 1% transaction fee I ended up averaging 1.29 for the withdraws for the balance while there. So essentially, buying in advance didn't help. If you travel to Europe routinely, probably best to get a foriegn acct and stock it when the rates are at abnormal lows. That way it earns interest and you can extract without all the fees or concern over the exchange rate.

One way to help get around this problem is pay in advance, online, for as much as you can based on exchange rates. Buy your flights and train passes when the rates are better, and then (gasp!) I think Rick might not approve but I'd rather make my hotel reservations online in advance, paid in full, than worry about budgeting for hotels or exchange rates while I'm there. True, you won't find a lot of Rick's suggestions online, but for me, especially travelling in peak season and being someone with a budget where I need to worry about exchange rates and limited funds, the peace of mind of advance-paid reservations is worth the drawbacks. Most of the sites where you can buy tickets and hotel rooms online make you pay in full when you book. Then with the big expenses out of the way the Euros you need for your trip while on your trip will be reduced enough that the exchange rate won't be as big an issue. Also - some of these sites will give you a full refund if you change your mind later.

I agree with Heather about purchasing some things on line in advance if rates seem "good". At least that is in some way a minihedge. Biggest problem these days is knowing in 7 months (next May for Blair) or in 7 days what is good now. Today Ireland announced a 47 billion dollar bailout of one of its largest banks. (Bloomberg reports today that Euro set for its biggest weekly decline in awhile. Two weeks ago it was on its biggest increase in awhile.) A week ago, article came out about a "secret" group that was set up in 08 to make sure the Euro did not fail (Wall Street Journal online Sept 24). With the Greek crisis this spring, it still had trouble getting its act together to "save" the Euro because of the brinksmanship of French leader vs. the brinkwomanship of German leader. Just like it has been said already, "guessing" future rates is in fact guessing. Blair on Sept 21 you wanted to buy at 1.30 because it was good. Now that rate is 1.26.

Correction Skip 1.36 not 1.26. I agree tho, It is a huge gamble and May is a long time from now. I just hope this gold bubble bursts before May, so that everyone can come running back to the dollar. Thats what i will plan on for now.