Good time to buy dollars?

A

Annieindublin

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I’ve a trip to USA early 2026.

I’ve been watching the Dollar. Thinking I might buy some dollars now. Maybe make a dollar account in my Revolut.

Any thoughts folks?
 
The dollar is a better deal now than it has been since late 2021. Now is a good time to buy.

Whether there will be a better time between now and early 2026, is unknowable.
 
cremeegg said:
Whether there will be a better time between now and early 2026, is unknowable.
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Which is why you cannot say . . .
cremeegg said:
Now is a good time to buy.
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When you're buying foreign currency (or shares, or bonds, or any other financial asset) the price that it used to have in the past, before you bought it, is completely irrelevant. All that matters is (a) the price at which you buy it now, and (b) the price at which you will sell or spend it in the future. Banknotes, share certificates, etc, have no memory, and there is no force of nature which makes them tend to revert to the price which they had at some arbitrary point in the past.

In the world of investing, this is one of easiest lessons to understand, but one of the hardest to accept. We have a strong tendency to think that the prices that we remember assets having in the past, particularly if they were sustained for a period, are in some sense "normal" and there will be a tendency to revert to those prices. But it's not true at all. People who do this for a living, people who are employed and paid handsome wages and even more handsom bonuses by large financial institutions to make money for them by trading in currency, consider a number factors when making purchase and sale decisions, but historic exchange rates are not one of those factors; they are no use at all in predicting future exchange rates.
 
TomEdison said:
When you're buying foreign currency (or shares, or bonds, or any other financial asset) the price that it used to have in the past, before you bought it, is completely irrelevant. All that matters is (a) the price at which you buy it now, and (b) the price at which you will sell or spend it in the future. Banknotes, share certificates, etc, have no memory, and there is no force of nature which makes them tend to revert to the price which they had at some arbitrary point in the past.
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This is also not understood by the wife when she goes shopping.....
 
I'm against trying to "time markets".

But there could be an alternative case made for buying (at least some) dollars now. Specifically, you presumably currently hold wealth in euros and none in dollars. Converting some euros to dollars would therefore give you better diversification of your wealth.

Either way, I'd suggest trying to see if you can earn a bit of interest on the money between now and your holiday, regardless of what currency you hold it in.
 
@ClubMan to me the key distinction is this:
"timing the market" = "I think I know which currency will increase in (relative) price, so I will buy it now"
"diversification" = "I don't know which currency will increase in (relative) price, so I own a bit of each to limit the risk of either one depreciating"

I'm against converting euros to dollars on the first basis, but can see a case for converting euros to dollars on the second basis
 
Not every decision is timing the market. They have to buy dollars at some point between today and the date they intend to spend them.

For someone who thinks they can time the market:
- If they think the rate will get worse they should buy them today.
- If they think the rate will get better they should buy them at the last moment.

So when should the person who doesn't believe in timing the market actually buy them?
 
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We are paying for the trip in monthly instalments. A dollar amount as it’s an American company. The monthly payment has dropped by over 10% which is excellent for us.

We will need additional cash when we are there. Not a lot, a few hundred will do. If I had bought dollars back when we booked the trip I’d have spent a lot more currently looking at.

I think I’ll buy move about half of what we estimate we will need to a dollar Revolut account now.
 
With US national debt heading towards $42 Trillion the medium term trend is for further dollar weakening. The US administration states that they have a strong dollar policy but many feel that they would actually like to see a weaker dollar. Foreign investors have been selling US treasuries and equities and this trend is gathering pace which also bodes for a weaker dollar. The EU countries increase in defense spending is a strengthening tailwind for the euro.
 
Corola said:
For someone who thinks they can time the market:
- If they think the rate will get worse they should buy them today.
- If they think the rate will get better they should buy them at the last moment.

So when should the person who doesn't believe in timing the market actually buy them?
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There's two answers to that.

One is to purchase in stages over the the period between "now" and "the last moment". (that's not very different from the approach you sugges3t yourself in post #3.) That way, overall the average price you pay to purchase dollars won't be the best price available during that period, and it won't be the worst price available during that period; you'll get, in theory, slightly better than the middling price, and you should be happy with that.

(Why slightly better than the middling price? Because, if you purchase with the same amount of euros each time, for purchases when the price of dollars is low you'll get more dollars than than for purchases when the price is high. So, at the end of the process, when you look at the pool of dollars you hold, more of them were purchased at low prices than at high prices, so your average cost of purchasing dollars is below the middling price for the period.)

The other approach is to think about your attitude to risk. You're going to need the dollars in, say, six months time; you have to buy them some time between now and then. You know the price you would have to pay now. If you wait, you might get either a better or a worse price, but you can't know which. So, are you somebody who likes to take a gamble? If not, buy the dollars now and stop thinking about it. If yes, is this particular gamble a gamble you want to take? It's an even-money gamble (as in, the chance of winning is the same as the chance of losing). Which would you feel more strongly — happiness if you take this gamble and it pays off, or disappointment if you take this gamble and it doesn't pay off? The answer to that question will tell you whether you want to take this gamble or not.
 
If you have a Wise account you can add a dollar account, exchange from your euro account and earn 4% or so monthly interest on your dollar holding, which gives you a little buffer between now and your trip.
 
@Annieindublin . I wouldn't overthink this. We travelled last summer and were buying at about 1.04 to 1.08 in advance. At 1.16 or 1.17, it seems good value now. I only buy up to the free Revolut limit each month and combine USD with sterling. Had to settle a USD trip yesterday and another coming up in November, so will space it out over 4 months.

Never know what's going to happen with the US economy at the moment.
 
Yah it was when the monthly payment changed by €50 I had an overthinking moment
Also I’m on a few FB groups where a lot of Americans are looking into moving to Europe and they are panicking. However moving the proceeds of a house sale is a bigger deal so I understand where they are coming from.
 
Revolut charges an extra 1% fee on foreign exchange over the weekend so make sure you only exchange during the week. The same applies if you are using your EUR balance when spending on your Revolut card in America - buy dollars during the week to last you over the weekend.
 
TomEdison said:
All that matters is (a) the price at which you buy it now, and (b) the price at which you will sell or spend it in the future. Banknotes, share certificates, etc, have no memory, and there is no force of nature which makes them tend to revert to the price which they had at some arbitrary point in the past.
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You are way overthinking this. Its not an investment, its spending money for her holliers, there will be no price at which she sells. She will spend a little more or a little less eating out in NY.

If she buys now she will have the satisfaction of knowing she bought at a good time, sauce for the steak. Will there be a better time in the coming months. No one knows.
 
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