Author Topic: International transfer and currency movement  (Read 3875 times)

Scandium

  • Handlebar Stache
  • *****
  • Posts: 2333
  • Location: EastCoast
International transfer and currency movement
« on: July 07, 2015, 12:23:04 PM »
So I got a bit of a windfall in a foreign currency; NOK to be exact. Due to lower oil prices and poor economic outlook this had plunged ~30% against USD since last year. Costing me over $10K, already a bad start. Now I'm getting ready to transfer to the US it started dropping even more! Almost 5% in the last week alone (byebye $2,000). Some say due to greece nonsense, china stock plunge, or a possible Iran deal releasing oil onto the market. Of course "analysts" (i.e. fortune tellers) say the NOK might strengthen later this year, or it may not. It's not a very heavily traded currency from what I gather.

So, do I wait and see if it'll improve at least a few percent, or do I "stay the course" and transfer immediately? Possibly before it drops even more, as some do predict. (for example if the Iran deal happens or Fed rate rise). On the other hand there is a lot of uncertainty just now (china +greece) pushing people towards USD. Once this calms down in a few weeks maybe it'll stabilize some? Anyone more familiar with currency exchange rates and how best to do this?
thanks
http://www.bloomberg.com/quote/NOKUSD:CUR
« Last Edit: July 07, 2015, 02:38:51 PM by Scandium »

fa

  • Stubble
  • **
  • Posts: 233
Re: International transfer and currency movement
« Reply #1 on: July 07, 2015, 12:28:36 PM »
If you are unhappy with the exchange rate but want to bring the currency over, could you open a foreign currency bank account.  I believe Interactive Brokers does this.  At least you would have ready access to your money if the exchange rate gets better.  I would imagine that Norwegian currency is hugely influenced by oil prices.  No doubt, these will rise at some point.  Maybe wait for that moment?

johnny847

  • Magnum Stache
  • ******
  • Posts: 3192
    • My Blog
Re: International transfer and currency movement
« Reply #2 on: July 07, 2015, 12:31:48 PM »
You're thinking about timing the market. Specifically, the currency market.

I don't think anybody can make reliable predictions about the currency market any more than people can make reliable predictions about the stock market.

Just get it over and done with. You win some and you lose some.

TheAnonOne

  • Handlebar Stache
  • *****
  • Posts: 1630
Re: International transfer and currency movement
« Reply #3 on: July 07, 2015, 12:47:35 PM »
You're thinking about timing the market. Specifically, the currency market.

I don't think anybody can make reliable predictions about the currency market any more than people can make reliable predictions about the stock market.

Just get it over and done with. You win some and you lose some.

While this is true, NOK is basically going to go with OIL, and OIL is going to go up at the first instance of "unrest" in the middle-east...

johnny847

  • Magnum Stache
  • ******
  • Posts: 3192
    • My Blog
Re: International transfer and currency movement
« Reply #4 on: July 07, 2015, 12:49:43 PM »
You're thinking about timing the market. Specifically, the currency market.

I don't think anybody can make reliable predictions about the currency market any more than people can make reliable predictions about the stock market.

Just get it over and done with. You win some and you lose some.

While this is true, NOK is basically going to go with OIL, and OIL is going to go up at the first instance of "unrest" in the middle-east...

So let me get this straight before I construct my actual response:
1) You agree that you can't time the currency market.
2) In this case you can time the currency market.

forummm

  • Walrus Stache
  • *******
  • Posts: 7389
  • Senior Mustachian
Re: International transfer and currency movement
« Reply #5 on: July 07, 2015, 01:22:04 PM »
But it feels in my wishy parts that I can predict that it will go up soon. All those other traders with their hundreds of billions of dollars are wrong!

Scandium

  • Handlebar Stache
  • *****
  • Posts: 2333
  • Location: EastCoast
Re: International transfer and currency movement
« Reply #6 on: July 07, 2015, 01:26:34 PM »
You're thinking about timing the market. Specifically, the currency market.

I don't think anybody can make reliable predictions about the currency market any more than people can make reliable predictions about the stock market.

Just get it over and done with. You win some and you lose some.

While this is true, NOK is basically going to go with OIL, and OIL is going to go up at the first instance of "unrest" in the middle-east...

Well ISIS has been rampaging through the middle east for a while now and oil plunged.. There's always unrest in the middle east. But yes, oil dropped to ~$50 last week which coincided with a drop in NOK. Now whether it will go back up.. Who knows? And apparently norwegian industrial output figures came out the other day which didn't look good so people ditched their NOK. And like I said others claim people flee to the safety USD with all this volatility.

Yes I guess this is fundamentally market timing. Thinking about it I my only reason would be to wait maybe a week or two until the worst uncertainty with Greece (and china) shakes out and perhaps it will get back to a more "normal" level. Gambling? Perhaps.

I do have a bank account there, but I have all my investments in the US where I live. I don't really gain much by keeping my money over there (other than a tax headache I guess)

Scandium

  • Handlebar Stache
  • *****
  • Posts: 2333
  • Location: EastCoast
Re: International transfer and currency movement
« Reply #7 on: July 07, 2015, 01:29:55 PM »
But it feels in my wishy parts that I can predict that it will go up soon. All those other traders with their hundreds of billions of dollars are wrong!

touche. I see what you mean. But with a thinly traded currency, great uncertainty at the moment, and lots of short term gambling in currencies, perhaps it's different..?

forummm

  • Walrus Stache
  • *******
  • Posts: 7389
  • Senior Mustachian
Re: International transfer and currency movement
« Reply #8 on: July 07, 2015, 02:37:51 PM »
But it feels in my wishy parts that I can predict that it will go up soon. All those other traders with their hundreds of billions of dollars are wrong!

touche. I see what you mean. But with a thinly traded currency, great uncertainty at the moment, and lots of short term gambling in currencies, perhaps it's different..?

Wasn't needling you--just a hypothetical market timer, in response to the post prior to mine. Your post was rational. You're just thinking about when to get out given that you're sure you want to get out. But since I don't have a crystal ball I don't have any great help to offer.

dungoofed

  • Pencil Stache
  • ****
  • Posts: 661
Re: International transfer and currency movement
« Reply #9 on: July 07, 2015, 04:56:56 PM »
Here's my take on it, since you asked:

For cash,
1) determine how much you want held in cash (day to day purchases, emergency money, one off expense, upcoming holiday, asset allocation etc), then
2) hold it in the currency in which you plan to spend (invest) it.

eg If you had SEK1000 of expenses coming up in August and you made the decision that would incur this cost today based on the information you have then my advice would be to convert the money to SEK now instead of exposing yourself to the currency risk, even if you had a view on what the market would do.

In your case, if you are planning on doing something with it that requires NOK then by all means keep it in NOK.* Otherwise bite the bullet and convert it to whichever currency you need it in**


* And there might be a few options here! The OBX might have some bargains for starters. Alternatively, you might want to convert it to USD and buy the Vanguard energy ETF.

** The one big exception to the rule is if you are a US citizen and the US doesn't know about the account in Oslo (which is illegal, btw). Then there might be a case for keeping it that way but YMMV.

Goldielocks

  • Walrus Stache
  • *******
  • Posts: 6945
  • Location: BC
Re: International transfer and currency movement
« Reply #10 on: July 07, 2015, 06:22:03 PM »
I am juggling two currencies now too... for a few years...

I have learned that you want the bulk of your investments in the currency for the country you will retire in.  If it suddenly tanks, that is OK then, because you will spend the in-country currency, and in-country will modify the drop somewhat.   So no matter how much better you THINK it might be in future, keep less than 20% of your investments in the foreign currency. (or foreign real estate / mortgages).

Next, finding a currency exchange fee that is very low is more important that trying to time the currency markets, because you can control that, at least.   We used Customs House to transfer large sums.  Took a few weeks to set up all that paperwork, but for larger sums, the savings in bank fees (over 3%) was worth it.  This savings would be a "hello $1200" in your case.

« Last Edit: July 07, 2015, 06:26:41 PM by goldielocks »

Scandium

  • Handlebar Stache
  • *****
  • Posts: 2333
  • Location: EastCoast
Re: International transfer and currency movement
« Reply #11 on: July 07, 2015, 08:43:05 PM »
Thanks for the input everyone, lots of good points. Almost all the money I transfer I plan to invest with vanguard. So thinking about it, the fund could go up 2% while I wait for NOK to gain 1%.. So yeah. Probably best to just do it, like everyone said from the beginning. Lol.

I live, work and will probably retire in the US so have little need for nok.

Re fees. I've tried out transferwise, which only charge 0.5% and claim to give market rate. Seemed legit.

CanuckExpat

  • Magnum Stache
  • ******
  • Posts: 3001
  • Age: 38
  • Location: North Carolina
    • Freedom35
Re: International transfer and currency movement
« Reply #12 on: July 08, 2015, 12:29:12 AM »
I've been in a similar situation, I think you made the right decision to just transfer right away. Trying to time speculate on the currency market is probably a maddening and pointless activity.

If you want to compare rates, you should also check out the company xetrade (they charge no fee, but their profit is built into the spread). I've found them reasonable and easy to work with.