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The Euro - How long do you think it will take to get the 1.50AUD again?

Discussion in 'Money Management' started by Sk3tChY, 2nd Dec, 2010.

  1. Sk3tChY

    Sk3tChY Well-Known Member

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    I'm in a bit of a predicament, one that's been stressing me a lot recently.

    I'm hoping perhaps the educated opinion of others may help me out a little and ease the stress a bit.

    I've currently got about 20k euros and with exchange rates the way they are at the moment, if I were to exchange it to AUD I'd be getting a fairly miserable payout, compared with exchange rates of the past.

    The euro is basically at a 10yr all time low.

    Now I don't really have a clue about economics, all I know is that it's so low because the European economy is in some sort of troubles at the moment and counties like Greece and Ireland have needed to be bailed out.

    I'm not entirely sure what that all means, all I do know is it means the euro has dropped in value significantly.

    The opinions I'm after are what do you guys think will happen with the euro? Will it recover? Is it just a case of how long?

    I know people say that past performance isn't at all indicative of future value, but looking over the past 10yrs the value of the Euro to the AUD has largely fluctuated between the 1.56-1.70AUD mark.

    I was really only hoping to try and get $30k for my euros (1.50AUD), but with things the way they are now I wouldn't even get $26k.

    I know there's a good chance it's going to continue to fall over the foreseeable future, but do you guys think it will ever get back to 1.50AUD? If so how long do you think it would take?

    It seems to me the US economy took a big hit and has since recovered, the AUS economy took a big hit and has since recovered, could it just be europes turn and they'll soon recover too?
     
  2. Johny_come_lately

    Johny_come_lately Well-Known Member

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    Hi,

    I'm very sorry, but what you are asking is beyond human capacity. If I was asked yesterday what todays All Ords would be, do you think I would have predicted a 1.82% rise.

    Things can go down as well as up. If you waited a year, you could just as easily get $19,000. There are greater events happening that can be comprehended by this simple person.




    Johny.
     
  3. Sk3tChY

    Sk3tChY Well-Known Member

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    Well I'm not exactly asking people to predict the future, of course they're not going to be able to predict exactly what's going to happen, I'm just after a more educated opinion on what people think will happen.

    My knowledge is very fundamental and very limited, but from what I do know it's quite normally for an economy to fluctuate a lot, I think they're referred to as economic cycles? Where an economy will basically grow and grow and then drop.

    This is what seemed to happen with the US and it has since recovered, this is what seemed to happen to us here in AUS and we have since recovered.

    My very basic fundamental knowledge would say to me, they may continue to drop or stay low for a while, but eventually they should recover, but like I said - My knowledge is limited, it would be nice to hear from someone a little more educated on the topic than I.

    I guess another basic question - Has a currency ever significantly dropped in value? (Besides the Zimbabwe money).

    Like the pound has always been roughly about double the value of AUD and the USD has always been slightly more valuable than the AUD - Has there ever been some currency that may have been like that, that all of a sudden lost all it's value?
     
  4. Johny_come_lately

    Johny_come_lately Well-Known Member

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  5. Sk3tChY

    Sk3tChY Well-Known Member

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    Read it - Articles like this tho seem to be a little sensationalized and generally fairly negative.

    When the US and AUS went through their financial issues, similar things were said, many of which were all negative. Now tho, both economies have recovered pretty well.

    I guess the one good thing out of that article is that Germany will probably help protect/recover the Euro and not pull out.

    I think the skepticism of Spain and Portugal's economy will be the deciding factor. If they need bail outs, then the euro will prob drop even more and then sh*t will really start hitting the fan.

    If they don't however, I'd like to think the euro will stabilize at around what it's at and slowly start to grow again.

    Is there any evidence or anything to actually prove Spain/Portugal are in trouble? Or is it all just skepticism?
     
  6. Johny_come_lately

    Johny_come_lately Well-Known Member

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    Sk3tChY,

    I think you need to ask yourself:

    1. Do I need the money now?
    2. How big a haircut can I bear?
    3. If I wait to change to dollars, could I have made a profit on dollars changed earlier?
    4. Am I going for a holiday to Europe?

    No point stressing. (thou I might if I had 5M in Euro)




    Johny. :)
     
  7. wdongli

    wdongli Well-Known Member

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    Economy Trend, Judgment, and Decision!

    No too many could know when Euro could return to normal and each of the economists do have different views. It is a matter to try find a needle in a rack of hay to get the trust view about economies. If there are a lot of us know the answer, we would have had not got GFC.

    1. Do you really need the money for your necessities? Sell since you hold the Euro longer you would pay the opportunity costs, which is a cost no one really know.

    2. What's the last cycle for A$ moved from peak to bottom? It should be a matter for a decade or at least 5 years if my memory is right. Would you want to hold the Euro for so long? If no, sell!

    3. Of course we should check the fads and winds if we really want to sell.

    Do feel it is not a matter about economies but what the judgment you get and would you want to make a decision. When you hold a position in defeating, you just could reduce the loss as much as you could!

    Please note the above is just a view from my angle only and hope you could sell for more.
     
  8. Tropo

    Tropo Well-Known Member

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    "I guess another basic question - Has a currency ever significantly dropped in value? (Besides the Zimbabwe money).

    Like the pound has always been roughly about double the value of AUD and the USD has always been slightly more valuable than the AUD - Has there ever been some currency that may have been like that, that all of a sudden lost all it's value?"



    PIMCO - Currency Market Basics

    What causes Currency Fluctuations?

    How are international exchange rates set?

    The Foreign Exchange Interbank Market
     
  9. Robert Blair

    Robert Blair New Member

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    Well Sketchy, you might be waiting a long time ...
     
  10. Sk3tChY

    Sk3tChY Well-Known Member

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    I think I'm just going to sell up and cop the bad exchange rate.

    If I hold on to it, it could just continue to drop and I'll lose out on even more.

    Even if it were to go up, at this point in time I think the risk of losing $X isn't worth the risk of gaining $X - Especially given all this talk about it potentially dropping even more.

    Getting it now, I'll be able to throw it into my mortgage so I'll regain some of the losses there, not much but it's better than nothing.

    I originally was hoping to exchange it for $30k and what has probably stressed me the most is that up until recently, this wasn't an unfeasible thing.

    Now I'll only get about $25.5k, which is a lot less than what I had hoped, but I guess it's better than holding onto it longer and potentially losing another few grand.

    If I throw it in the mortgage for a year it'll save me about $1,785 in interest over the course of a year, that might be the wiser option.
     
  11. wdongli

    wdongli Well-Known Member

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    You will be blessed since it is good start!

    At very beginning, when we try to make some money from any market, we feel not sense the market, we hope not check what the risks could be for what achievable opportunities, we bet on the fads and winds not know enough the market environment and our own affordability, we even don't ask what if we are wrong, and then we are trapped somewhere.

    Good news to your future and it could be your life turning point. Make money is simple but not easy. The problem is we all make it too complicated in our guess and hope games.

    I feel that you have started to separate the rewarded and no-rewarded risk: the volume of your Euro is too little if right we could not be rewarded reasonable enough but if we are wrong, since we are still in the stage to build our own financial bases and we could not forget the food, the house, and the impact to our life style now, we would feel upset.

    It is my experience and definitely not a excellent way to move forward. Mortgage is to get our own home house, which need to pay back as much and quickly as we can. Building a lovely home is not easy and actually it is a most important investment to most of us. It needs to be protected under any conditions.

    Before we could reduce the mortgage to a level we are comfortable or worry we have too much money than we need, don't put money in anywhere else, but learn the life logic and know the context to use them in the market you dream and believe could get big return. We have to get the driver licenses to drive any similar cars for a safe and happy driving, right?

    First thing first do and we need priority lists in this most important matter in our life, which are based on our own personal cases.
     
  12. Sk3tChY

    Sk3tChY Well-Known Member

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    Thanks for the opinions guys.

    I just went around to pretty much every bank and all of them say it'll take 3-6 weeks to 'process' the foreign bank draft.

    A little annoying, it's a bank draft, it's pretty much guaranteed money. I could understand it perhaps taking a few days for them to request the funds from the foreign bank and for it to transfer, but 3+ weeks it quite annoying.

    So now I just have to hope the euro doesn't die over the next 3 or so weeks.

    Never again will I ever get a foreign bank draft, it's ridiculous.
     
  13. Johny_come_lately

    Johny_come_lately Well-Known Member

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    I once had to wait 10 days with a commonwealth bank cheque! I mean really. It's not like the commonwealth's not good for the money. :mad:

    I used to get dozens of small dividend cheques from 3 to 11 pounds. I couldn't cash them because they were too small. :(

    Things like this really test me.




    Johny.
     
  14. Sk3tChY

    Sk3tChY Well-Known Member

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    I completely agree, 10 days to cash a commonwealth bank cheque is just a joke! Things like that should be done instantly on the spot!

    What really annoys me the most is that it's not a personal cheque, it's a bank draft, which is basically a bank cheque, which basically means you're guaranteed the amount stated on the cheque.

    I could understand them saying it could perhaps take a couple of days to process for the euro to transfer over to Australia and be converted into AUD, but 3-6 weeks, I mean come on, what a joke!

    When you go into the teller to deposit the cheque, I don't see why the teller can't simply call the bank then and there, read out the barcode on the cheque and have the bank wire the money then and there on the spot, or via email or something, or hell - Just debit the account somehow.

    I think it all just comes down to banks being greedy bastards. By making processing time 3-6 weeks it gives them more time to make money off your money.
     
  15. Johny_come_lately

    Johny_come_lately Well-Known Member

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    I guess it's up to us to get back at the banks. By buying bank shares. Then their profits becomes our profits!





    Johny. :)
     
  16. Sk3tChY

    Sk3tChY Well-Known Member

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    Heh, you'd think that. :p

    I bought a bunch of CBA and SGB shares just before the GFC, so even that didn't work out for me!

    CBA thankfully recovered and I'm back in the green for those.

    SGB however merged with WBC - So I'm still in the red for them.
     
  17. Johny_come_lately

    Johny_come_lately Well-Known Member

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    Sk3tChY

    "I just went around to pretty much every bank and all of them say it'll take 3-6 weeks to 'process' the foreign bank draft."



    IT'S one of the great mysteries of banking: why does money disappear out of your account almost immediately when you make a payment, but take days to arrive when you're waiting for others to pay you?

    CBA asked: where is the money?

    Nationals Senator John Williams asked the Commonwealth Bank’s chief executive Ralph Norris to explain why it took so long for payments to appear in its customers’ accounts.

    "Why can’t you do the same [as Bendigo Bank] and why does it take three, four days when the weekend's included and secondly, what happens to that money when it goes out of my account in one second and appears four days later, where does it go?"

    Mr Norris directed the question to his head of Business and Private Banking, Ian Narev, who replied that the bank was going to put in place a new system that allowed the quicker processing of payments.

    Mr Narev said the bank was investing more than $700 million in a “new core banking system” that would allow the faster transfer of payments.

    "Overnight?" asked Mr Williams.

    "Immediately," said Mr Narev.

    "And seven days a week?" Mr Williams asked.

    "Seven days a week, and in fact all our merchants from the time that that comes on board in 2011 will get real time recognition of their takings even on the Saturday and a Sunday," said Mr Narev.

    But Commonwealth Bank did not respond to Mr Williams' question of “where the money goes” in the days it takes to reach a recipients account, leaving COSBOA’s questions a mystery that remains unanswered.

    Mr Strong said: "The next problem is: what do they do with my money? We say they put it in the short-term money market and they say they're not allowed to."





    Johny.
     
  18. Sk3tChY

    Sk3tChY Well-Known Member

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    You've raised a very good point there.

    I guess it's just always been something people have accepted, transfers have just always taken that long.

    With technology where it's at right now, it should be instant.

    The banks are just pricks, making money off your money whenever they can and then having the nerve to charge you for their services.

    Pricks.