Price increase due to Euro exchange rate Forums

DollarYen · Account Deactivated

You should also be aware that the pound is actually now gaining significantly versus the euro. The pound is at it's highest today since the 1st of January and looks like going higher. I prefer to think what it costs to buy a euro and today it's 74p against about 77p when the pound was at it's weakest.

Rapide561

Hi

Just a quick word about buying your currency forward.

I shall use ficticious rates just for the example.

You have decided that you will import a motorhome from Germany and will pay for it on 30 September 2008.

The motorhome is costing 50000 euro. The rate of exchange today is 1.35, so a sterling equivalent of £37,037.

You telephone your bank - all high street banks offer a forward contract facility - and tell them the date you need to settle up for the motorhome. The rate offered for a FIXED DATE forward contract is 1.25. Your 50000 euro will cost you £40,000 on 30 Sept 2008. Whilst it is more than todays cost, you decide the forward contract is for you, as it gives you peace of mind.

Now the 30th September approaches and here are two hyperthetical situations.

1) The euro rate is now a whopping 1.55 to the pound. You 50,000 euro will cost £32258 to buy on the day. However, your forward contract is exactly that - a contract and you must use it. Yikes - you are a lot worse off than if you had not bothered.

2) Scenario 2 sees the euro rate at 1.1 on the 30th September. This would mean 50000 euro would cost you £45,454. Yippee - you have done a good thing by taking out the forward contract.

The other option is to open a foreign currency account. Again, all the high street banks offer this. The account is based in the UK and instead of sterling is in euro. You simply buy euro at the commercial rate on the day and the bank pays euro into the euro account, debiting the sterling account with the cost.

A UK based euro account, whilst it may come with a cheque book, cannot be simply used to make purchases with overseas. (Well it can, but then you are potentially into something called an inward collection or a cheque negotiation.......)

Russell

bear1

This is not unusual and in the new car world price increases after you've placed your order have to be borne by the purchaser. In fact I'm sure the SMMT contract has a clause in it to cover this eventuality. Only having to pay one third of the increase I would call a result!

carol

As someone who ordered a mh from Dusseldorf, for delivery April/May (dates given at the time), rate we were getting at that time from Nationwide on purchases was 1.47 even 1.48 on two!!!

Like others have said, we didn't think too much about forward buying (and I didn't even know of it then), and as the rate hadn't done much below 1.45 for ages, we weren't even worried.

Thanks for framptoncotterel (Roy Tipping) for telling me about the

oldenstar

Thanks to all who responded.

For further info the van is just over £30k (£40k too much for my circumstances), and initial deposit was £1k.

All in all the consensus generally seems to be that the dealer and manufacturer are being pretty fair, so I will probably go along with it, providing that the van can be supplied on time.

I will be trotting along to the NEC next week so will hold my fire until then.

Great to be able to put this sort of question to the forum-certainly helps with decisions.
Paul

carol

Paul what day are you going? I'm going on Tuesday.... hope it works out well and you get the mh on time....

Carol

kontikiJo

I also bought a motor caravan at the NEC last october and it is due to be delivered in April, it is a German built, so therefore I wonder whether the same will apply to me. Not the news you want to read before going to bed. Thank you for the information anyway. I shall keep you all informed. Regards Joe

carol

skimbo

Just checked with Brownhills regarding my notorhome ordered in August 2007. Thet are not upping the price