Euro vs USD

[ZeeJustin]

I have a large amount of Euros from a tournament finish in France that I decided to keep in euro. I vaguely recall reading somewhere that the euro will peak at about 1.5 usd per euro, but since I don't remember the source, I obviously have no clue how accurate that information is.

What do you guys think, when should I convert my euro to USD?

I tried to google for a chart of usd/euro conversion by time, but couldn't find anything that included 2005. I dunno how relevant that is anyway.
-thanks in advance
-ZJ

[parttimepro]

Short answer: no one knows how the euro and dollar will behave. Some analysts have predicted $1.40/euro by the end of the year, but they're pulling that number directly out of their butts.

Medium answer: maybe we can predict currency movements in the next year or two right now. Due to intervention by foreign central banks, we may be in a rare situation where currency markets are operating inefficiently (i.e. currencies are not valued "fairly" against each other). When the intervention stops, the dollar will fall and the value of the euro will rise. However, if you want to make this bet, the bigger upside is with asian currencies, especially the yen, won, and yuan, because it's their central banks making the intervention. The dollar would fall quickly if/when those banks stop buying USD, or China delinks the yuan from the dollar.

Long answer:
Well, I assume most of your expenses are in USD, so you really only care about getting the most $ for your euros. Keeping the money in euros has a few effects.
1. Potential appreciation. If you buy the whole "overvalued dollar" scenario, your euros will be worth more dollars later.
2. Increased volatility. Of course, there is no guarantee that the dollar will fall. If the markets are not in a special non-efficient place right now, then the dollar is equally likely to go up or down vs. the euro. In essence, then, you're taking risks for 0 EV.
3. Missed opportunities. Are you going to keep the euros in a savings account or something? If so, you're missing out on the +EV risk of investing in stocks or other investment vehicles.
Bottom line: convert the euros to dollars now. If you want to play the currency markets, buy unhedged international bond funds (which buy corporate and government bonds in other countries, so you get the income from the bonds as well as whatever currency movements happen). Otherwise choose an appropriate dollar-denominated investment.

[Elaboration]

[ QUOTE ]
I vaguely recall reading somewhere that the euro will peak at about 1.5 usd per euro, but since I don't remember the source, I obviously have no clue how accurate that information is.


[/ QUOTE ]

Zee,

The dollar actually gained v.s. the euro last week. Its at about 1.28. Thats the first time its been below 1.30 in a long time. It looks like the high was back in December at 1.36

Several factors contribute to the dollar's weakness. First and probably foremost is the robust budget deficit. Second is a lack of foreign investment or financing to fund the deficit. Low interest rates and piss poor yields are factors here too. Toss in a perceived stronger euro economy and you have your 5000 ft level explanation for why the dollar has been down.

The deficit isn't going anywhere, but yields are improving. I know that international markets are a hot sector right now. What does this mean? It means I dont think your gonna get a definative answer, but 1.50 seems really far fetched.

Good luck-

[GrunchCan]

Here's a chart for you.

You might also consider tracking the performance of euro dollar futures, but I'm not really sure how well that corresponds to the actual historical exchange rates.

clearstation.com is a pretty good site for free quotes & charts.

Happy researching.

[doppler]

Some say the $ will go up, some say it will go down, the only thing you can be certain of is that half of them will be wrong.

Just convert it to $ and be done with it. Unless you are planning to spend the money abroad it makes no sense to keep it in euros.

Speculating in currencies is not something an ordinary guy should do.

[ezmogee]

Zee-

Im in the same boat as still I have a few thousand euro from my cash in France and an equal amount of pounds from my cash in London...I have also held on to them to see if they'd appreciate in value.

Their seems to be little fluctuation at the moment although there is apparently increasing pressure from the EU to raise the dollar as they feel that they are fronting the cost of the war because of the weak dollar. In addition, the EU's emergence as a likely reserve currency may cause the US to focus more on its own dollar.

However, these are both mid to long term issues (at a minimum several months) so short term we really have no answers.

My major question is the value that I'll get my bank. If I walk up to a teller with three thousand euro & three thousand pounds, what type of transaction fees will there be? When I use an ATM in Europe, I get the money with a minimal transaction cost from my bank -- how does it work on the reverse end.

Anyone know?

Ezra

[GeorgeF]

As a rule the more confused you are the more you should diversify. Right now it looks like Sir Alan is going to raise interest rates in the US. Short term rates in the US are now higher than euroland, making the US$ more attractive. On the other hand something seems to be up GM FNM AIG MBIA all seem to be in trouble. The Iraq adventure is improving, or is it? Have you noticed that Airbus is beating Boeing?

[Jonathan]

Hi Justin,

I think that most of the responses you received to your question miss the key point which is this: What are your
needs or requirements for euros?

Do you plan on playing poker in Europe on a regular basis (for example, once or twice a year)? If so, I think you
would be well advised to keep an interest bearing account in
euros with one of the major european banks, such as DeutchBank. How much depends on what your perceived needs
are. But if you plan on playing in Europe at all, then
it will become very expensive for you to continually convert
dollars to euros and then back again....the transaction costs are just too prohibitive for all but the occasional tourist.

I got the feeling after one of our conversations in Monte Carlo, however, that you were eager to return to the States
and were no big fan of Europe. If thats the case, and you do not plan on competing in Europe on a regular basis, then you would be wise to convert the entire holdings to dollars immediately and not worry yourself about future exchange rate movements.

You are a professional gambler. You should speculate in areas where you have some expertise (poker) and avoid those
where you have absolutely no expertise (currency markets).

Bottom line: make your decision based on your expected future needs for euros. If those needs are 0, then convert now.


Suerte,
Jonathan

["spaceman"Bryce]

You still have USD ???? CONVERT TO ALL EURO BEFORE THE ECONOMY COLLAPSES HURRY>>>>>>>>>>>N OW!!!!!!!!!!!!!1

[DWarrior]

Thanks for the heads-up, dude. I'd be a gonner had it not been for your advice. Last night, after reading this, I went and sold all my stuff immediately (since the US economy will collapse, my house, my car, my cloth will all depreciate to nothing), and bought a crapload of euros.

So far, I had to tape some around my private area, so I don't get arrested, and had to use some as toilet paper, but at least I know I'm safe once US goes into depression.

Thanks again for the heads-up, I'm way ahead of the ignorant fools clinging onto their dollars now, thanks to your advice.