Forum Archive Index - August 2002

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi max,
 
>
>
>I try to invest in nz sharemarket, but i have some US$ my problem is
>when i try to exchange in the bank market they offer me an exchange
>rate more expensive (commissions included) that i read in the herald
>news paper. If anyone know what is the best way for exchange my US$.
> 
> 


The $NZ/$US exchange rate is fluctuating all the time, so use the 
exchange rate as published in 'The Herald' as a guide only.  Also the 
exchange rate published in the newspapers is the so called 'mid 
rate'.  This is half way between the so called 'buy rate' (the price 
you pay if you wish to purchase overseas currency from a New 
Zealand bank) and the 'sell rate' (the price you get if you wish to 
deposit an overseas currency cheque into a New Zealand bank account).

So whether you are a buyer or seller of currency, you will always do 
worse than the mid rate you see in the paper, assuming the exchange 
rate hasn't moved too far on the day.

So how to 'beat the system'?

Some years ago for 'small' amounts (I think it was under $NZ10,000), 
Countrywide bank had a system whereby you could buy/sell currency at 
the 'morning' rate, irrespective of what the currency had done in the 
time since.   This meant if the dollar had plunged since 9am you 
could buy overseas currency at a better rate from Countrywide Bank 
than my other bank at the time ( I think it was  Trustbank ).  
Effectively I could play off a fixed quote against a floating quote 
and get the best deal!   Unfortunately I don't know any banks that do 
'fixed quotes based on the opening bell price' any more.  If other 
sharechatters do, I'd be interested!

I've been told that Thomas Cook Limited, the international travel 
company, sometimes offer better deals than the banks do on currency 
conversion.  However, I've never tried this myself.  Anyone out there 
had any success with this method?

The other way to beat the bank rake off is to buy a share that is 
listed on the US market *and* the New Zealand market ( FFS, FPH, TEL 
and TLS come to mind ).  Use your $US to buy the shares on the US 
market, then write to the share registry in the USA and get those 
shares shunted over to the New Zealand market register.  When you 
sell them you will have $NZ, and will have paid nothing in currency 
conversion fees to the banks!  Of course, if those shares you 
bought were not the shares you wanted, then this method would incur a 
double brokerage fee which might be worse than doing in all through 
the banks in the first place.  HTH

SNOOPY



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