take sterling trav. cheqs, not dollars

chris101

I just got my travellers cheques in dollars, but having made a few calculations with an online currency converter, I've realised it would have been better to get them in pounds sterling. This is because I would get a much better exchange rate from sterling into rupees, despite the fact that there is a £15 charge for sterling and not for dollars. Just thought I'd point this out so that no-one else makes the same mistake.

shere

According to economic theory such arbitrage pricing opportunities should not exist. Even if they do unless you are changing seriously huge amounts of money it makes very little difference.

Merchant

There's no such thing as an "official" exchange rate (for currencies that are not pegged to each other). Anything you see published, in a newspaper or in an online currency converter, is just a compilation of the rates from various banks and agencies. The rate you get at a particular point of exchange somewhere in India may or may not be close to that average.

Rates fluctuate daily (though since the rupee is not traded by currency investors, it doesn't move much against the dollar and the pound), so whatever the converter comes up with today may have little bearing on the rate at the time you cash your check.

renedu

Yes, but it is 2 dollars to the pound...Dollars are fine and go far in India!! However, I believe in cash and ATM, too many charges with travellers checks and also not as easy to use. You can usually pay for a room with some $5 and $10 bills as people do someimtes want to take $ or €...WHY? India still has laws on taking currency out of the country, so by having this little on the side it can be easily "exported" - not that they guy giving camel rides is piping funds to his account in Switzerland...

byronic

I think that cash is best? Some of the places I've been in India have never even heard of a travellers cheque...
OR
ATM card to stock back up on the rs stack of bills while in the big city?

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chris101

I'm not much of an economist but I always assumed that the value of a certain currency can go up against one and down against another currency.

However, I've just had another go on the online currency converter and I see that the conversion rate they give for pounds to dollars is 1.89, whereas the rate at the travel agency was about 1.7. So this has buggered up my calculation and therefore you are probably correct. Does this mean they've ripped me off at the travel agency, or is the online converter out of date?

Merchant

Those currency converters are all "ideals." Conversion is a misleading term. You are buying one currency with another, and what you pay--like any other tradable good--has everything to do with the seller. You can go somewhere else to get a different deal.

Travel agencies will never give as good a rate as a bank, but you always have to look into the transaction fees you're being charged. Maybe the fees are included at the agency, and by the time you have gone to a bank, exchanged funds at a nominally better rate--but then added in the bank's commission--the the money in your hand may be exactly the same.

crvlvr

Its best to get your currency converted at a bank rather than travel agents or currency exchangers -- who usually charge more as they just take your currency to the bank and convert it back into rupees. In addition, exchange rates for cash and travellers checks are less favourable than "electronic" transaction such as credit cards and ATM for 2 reasons. 1. It costs more for the bank to handle cash and process travellers checks (ppaper has to be sent back to your bank etc. and 2. Electronic transactions are consolidated by the bank and then settlled in bulk further reducing transaction costs.

If you are going to hold a foreign currency then it might make sense to hold Euros or pounds rather than US $ -- which has been depreciating quite a bit and according to experts will depreciate more in the future.

Anders

These days I take no travellers checks in any currency, only ATM and a little bit of cash.

shere

Yes currencies fluctuate but even if there was a chance of making a gain through fluctuations as described they would be very short term as demand and supply etc would restore parity/equilibrium to a point where no gain was possible. Well thats what I was taught when a few years ago.

edwardseco

That is a funny post. Someone just asked me elsewhere if there should be a requirement in US schools for economic literacy..

goangoangone

There are buying and selling rates,"the spread." This is where the travel agents etc make their do$h.

I bought sterling Amex travellers cheques online here
http://www.uk-currency-exchange.co.uk/buy.htm
No commission,5quid next day delivery charge, any amount.It's the cheapest I could find for T/Cs. All the banks and Thomas Crook etc wanted up to 2% commission.

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