Thoughts on Converting Euro Savings to GBP

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Daddy

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I am strongly considering withdrawing my Euro cash deposits from NIB and going North and opening a sterling account. It has to be a safer bet than leaving it in the euro with all the uncertainty in the coming months. Ulster Bank Newry pay a reasonable 1 year fixed rate of 2.8%. I am well aware of the associated currency risks but this is how I see it. If the euro collapses sterling will be worth more full stop. If things settle down in a years time I can always repatriate it to southern Ireland. I know the UK economy is no star but it has to be safer than Euroland at this point in time. Is there anyone who agrees or who has done this or anyone who thinks my theory is wrong at this moment in time.
 
With all the 'risks' going around I would be worried about the sun coming up tomorrow and whether we have a plan for that. Serious though Moodys and Standard & Poors are now competing with each other to 'identify' the next risks.

On the Euro - none of the matters involving Greece, Spain, Italy, Portugal and Ireland were new. They first were aired by the German Bundesbank in 1995. The then so called 'club-med' countries curiously had the same problems now as they had then. Greece invariably lied about its statistics and they ran a deficit you could only marvel at.

There were three tests at the time - inflation, debt to gdp and borrwoings as % of gdp.

When Germany was unable to revalue its gold reserves.. it failed the debt/gdp test amd so the all the Club med countries (and Ireland) got into the single currency.

Then nothing was done vis a vis Greece and Italy .. so none of this is new. Not any of it.

Just becasue we are now 'identifying' risks does not mean the patient is actually going to die. If it is, then the disease is 15 years old and was just as fatal then as now.

I have written several times here about this - but instead of issues - we sometimes attack the individual.

I think that the markets 'assumed' that the bonds of all countries in the Euro were effectively similar to those of Fanniae Mae in the US - that whlst there was not an explicit government guarantee - there would be in the event of the nightmare situation.

I dont think the Euro is collapsing anytime soon.

If you feel happy to move your deposit, then move it.
 
I have very little savings in real terms but I feel its even more important for people like me to do the utmost to protect what little we have.

I've read all the posts about putting your money here or there or outside the euro zone all together and to be honest I've just given up worrying as no one can predict the future or the best option for our savings but things are beginning to look really serious now with the euro.

I have zero expertise in this area but for what its worth my instincts tell me that if the eurozone crashes I would prefer and hopefully be better off to have my money in Sterling.

Ireland is in receivership and god only knows how a Eurozone crash will affect this country.
 
..and have you looked at the effect on the UK?
you would hardly expect George Osborne to spell out to the UK electorate that the Euro going will be a little worse than Lehmans.

By moving your deposit to the UK - you will have a really poor interest rate but maybe a level of comfort. Receivership of course is not liquidation. And if you simply looked at the level of our government deficit and some of the astronomical wastes of money that go on day after day, do you not think that we should be looking at this ?

In the Euro context, Germany and France want Greece to er.. reform before they bail them out.
 
I moved money to the UK last year. I'm no expert, just an ordinary Joe Soap but my instinct told me it was the right thing to do. Whether I've done the right thing is yet to be seen but what I will say is I'm sleeping a hell of a lot better at night
 
If everybody did that - nobody would be sleeping at all.
It is simply an example where a solution for you is disastorous for the country fanned by celebbrity economists who tomorrow will tell you why what they predicted yesterday did not happen today. And you heard that here first.
 
It may well be prudent to spread your investments but it is another question as to whether it is prudent to incur the additional exchange rate risk involved in moving funds to Sterling. Even the mosy pessimist of economists would view the 100k deposit guarantee to be solid. I fully agree with WizarDr that the panic reaction of moving money all over Europe is further damaging our Economy and while I accept the rationale for some people in doing this I really don't see the need for it unless you have a level of savings sufficiently high enough to merit this type of risk spread.
 
I note that today's Financial Times has a headline "Treasury's fear rise over euro break -up' and that there are '..very very great risks to Britain if the euro falls apart.."

What ever can they mean?
 
Despite the sabre rattling by Germany I believe that they need to pony up on this occasion to settle both the currency and the market. This is not just a Euro issue as if the currency breaks up in any type of unmanaged fashion it will reap havoc in the marketplace. The currency market is skitterish enough at present and colatteral damage of any further problems will not be restricted to Eurozone countries.
 
44brendan said:
It may well be prudent to spread your investments but it is another question as to whether it is prudent to incur the additional exchange rate risk involved in moving funds to Sterling. Even the mosy pessimist of economists would view the 100k deposit guarantee to be solid. I fully agree with WizarDr that the panic reaction of moving money all over Europe is further damaging our Economy and while I accept the rationale for some people in doing this I really don't see the need for it unless you have a level of savings sufficiently high enough to merit this type of risk spread.
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i guess i'm saying that a deposit in a given currency is like an investment in that currency. and having all your eggs in one basket currency-wise is analagous to having all your investments in one area. its not about the 100 K guarantee its about the possibility of a EURO break-up, however unlikely. i think its riskier leaving all your savings in irish regulated euro accounts.

what level of savings do you deem sufficiently high enough to merit spreading into different currencies?
 
By re-denominating currency from Euro to sterling and depositing funds in the UK an investor is not merely spreading the investment risk he is now taking on an exchange risk. the first issue to be aware of is the exhange rate spread. I.e. There will be an initial loss due to the buy/sell currency rates offered by a Bank. The 2nd risk is the rate risk. Currently Stg deposit rates are lower than ours. The 3rd risk is the exchange risk. If Euro/Stg moves in your favour you will potentially make money. If it moves against you you will lose money. However for the transaction to make sense you would probably be investing in a longer term fixed rate product which means that the cash is tied in to the term and rate gain/loss will only come into play at the end of that term. It is a risky strategy and currently very difficult to assess what way sterlig/Euro will move in the next 12 months or so. Like any gamble it may pay off or it may not. In terms of the question of level of savings that would merit taking on a currency risk, well there is no exact answer to this. Obviously low level transactions will incur higher margin spread re exchange rate and lower rates of deposit so its probably not worth the risk on small transactions. Otherwise its an individual choice but in my view currency speculation at this time is a big gamble.
 
44brendan said:
By re-denominating currency from Euro to sterling and depositing funds in the UK an investor is not merely spreading the investment risk he is now taking on an exchange risk. the first issue to be aware of is the exhange rate spread. I.e. There will be an initial loss due to the buy/sell currency rates offered by a Bank. The 2nd risk is the rate risk. Currently Stg deposit rates are lower than ours. The 3rd risk is the exchange risk. If Euro/Stg moves in your favour you will potentially make money. If it moves against you you will lose money. However for the transaction to make sense you would probably be investing in a longer term fixed rate product which means that the cash is tied in to the term and rate gain/loss will only come into play at the end of that term. It is a risky strategy and currently very difficult to assess what way sterlig/Euro will move in the next 12 months or so. Like any gamble it may pay off or it may not. In terms of the question of level of savings that would merit taking on a currency risk, well there is no exact answer to this. Obviously low level transactions will incur higher margin spread re exchange rate and lower rates of deposit so its probably not worth the risk on small transactions. Otherwise its an individual choice but in my view currency speculation at this time is a big gamble.
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the first "risk" you mention is really the cost of the tranfer which could be mitigated to a large extent by using xe.com or transfermate.

i would consider the second "risk" a cost also. although there are some competitive rates to be had abroad e.g. nationwide international has decent rates including easy access accounts that have the same rate as rabodirect.ie.

the third "risk" is indeed a risk where you could win or lose.

leaving your savings in irish regulated euros leaves you open to devaluation should the currency union break up. this is also a risk. the question is which is riskier?
 
Sorry can't answer that one. In my own view a Euro break-up in the short term is unlikely. I'm basing that opinion on the potential financial Tsunami that a break up would cause. I can accept some rationale for those with very high level of deposits to spread their risks but unless you are looking at very significant deposits I don't see the merit in taking on an additional exchange risk.
However I acknowledge that we live in uncertain times and some very strange things have happened over the past few years!
 
Kerrigan said:
I moved money to the UK last year. I'm no expert, just an ordinary Joe Soap but my instinct told me it was the right thing to do. Whether I've done the right thing is yet to be seen but what I will say is I'm sleeping a hell of a lot better at night
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I did the same thing a few months back and moved most of my savings to Britain as I don't ever intend coming back. I was delighted to avail of an excellent exchange rate. I get 3.2% interest rate not brilliant but I do like those lovely large crisp British sterling notes, somehow they appear to look much more valuable than the miserable paper thin euro:)
 
I did the same thing a few months back and moved most of my savings to Britain as I don't ever intend coming back. I was delighted to avail of an excellent exchange rate.
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Surely it's not the same thing. You are now living in the UK so it makes sense to use their currency. The OP is asking about saving in different jurisdiction and currency area to where they are resident.
 
i'd imagine they'd let the new punt devalue until our economy improves before re-pegging to sterling.
 
e_drizzel said:
i'd imagine they'd let the new punt devalue until our economy improves before re-pegging to sterling.
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Which to my mind would mean that I would get a fair few more punt nua's by moving my euro into sterling now rather than leaving my money in euro's now and waiting for the devalued punt nua to arrive.
 
You are still taking a risk. Neither I nor any posters here can advise how exchange rates will fluctuate in the medium term. If your'e happy to take the gamble then you should do so but in the knowledge that it is a risk and exchange rate movements can go either way.
 
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