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Some interesting currency moves today

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ScoobyDoes
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Re: Some interesting currency moves today

Postby ScoobyDoes » Wed, 11 Mar 2015 9:21 am

I just received a letter from OCBC.....

"Due to the recent monetary policy development in Europe which is causing volatility in the currency markets, we will be revising the monthly service fee for your EUR Account(s) from April 1st 2015:

EUR25,000 and below Waived
Above EUR25,000 0.5% p.a. for a monthly average balance in excess of EUR25,000


To avoid the Service Fee, you may wish to convert and transfer your EURO funds to SGD or USD"


What the hell they trying to do? As a business account this causes a pretty problem for us, an SME. They trying to force everybody to prop up the SGD or what? We still don't get 0.5% interest on savings in the SGD so either way we've lost 20% now on the balance in Euro and they want to charge a service fee to drain it even more knowing if we convert we accept that 20% loss and can't wait for a recovery. Given 95% of our business is conducted in Euro it doesn't make sense to keep converting to SGD or USD so they are hanging us over a barrel.

Is it likely other banks will follow suit because it looks like we're going to have to look at options for moving everything? :mad:
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Re: Some interesting currency moves today

Postby Wd40 » Wed, 11 Mar 2015 10:31 am

Wow, so are they charging you a fee of 0.5% PA for lending money to them? :???:
I thought its only the CHF and DKK that have negative interest rates so for them it makes sense.
The EUR until now rates are positive, although very close to 0.

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Re: Some interesting currency moves today

Postby JR8 » Wed, 11 Mar 2015 10:53 am

I wasn’t expecting to get an anecdote of a direct casualty quite that soon!

From the earlier/above article extracts, I think it’s fair to conclude that at least in the medium term, the writing is on the wall for the Euro.

Banks earn a lot from lending out their clients total aggregate ‘minimum account balance’. Indeed this is the main way a bank can still turn a profit from offering a headline ‘Free banking’ offering. That and selling fee-charging ‘premium products’ like gold cards, priority banking etc.

So right now the bank is faced with earning much less, if anything, on your euro min. balance. I.e. your account is not paying for itself at the level they require.

It might run deeper too. They likely don’t want large Euro exposure on their corporate balance sheet, given the risk it carries. That also probably feeds over into the banking regulator’s Capital Adequacy Requirements and the funding thereof. In short, Euro account holders are now costing them money.

You might have seen a 20% loss on the Euro to date, but you can see where that is probably heading; south. I don’t think you can count on it recovering any time soon, that hope would currently be a highly contrary view. That, and of course all my comments here are all IMVHO. It’s a bit like predicting the future path of a hurricane, dangerous.

I do think other local banks will follow suit, they won’t have a choice. At least on accounts that are similar to the one you have.

What would I do? Tricky, and I don’t envy your position. I might start with fine-tuning the cash-flow management. Limit holdings in Euro to that required for the near-term, xMonths? With any excess funds, ‘sweep’ out of Euro and into anything else that’s less doomed, either S$ and US$ might make sense. Preferably via a mechanism that isn’t going to whack you with large fees, or a stupidly fat FX spread. If your bank are 'kindly' offering you this service, look veeery closely at the gross costs, the headline ones, but also the cost of their 'retail' FX spreads, which are usually lousy esp. compared to the likes of Mustaffa, The Arcade, etc!

I wonder to what extent people in similar shoes as your own might begin billing in a harder currency. There surely must be legions of international SMEs facing precisely this problem. Maybe see if you can find any current articles on ‘euro cash-flow management’ from international SME-type business orgs/bureau/chambers-of-commerce etc...

--- My own bank back home have instituted a new min. a/c-bal. on my personal current account, £10k. They keep calling me any time I dip below it - any time I receive a sizeable receipt, they see the funds transfer out to my stock brokers and this clearly really inflames them... so much opportunity to scalp me with their own fee-packed $hitty products, all going at Mach2 right out of their front door.

That really sucks, since at the same time I’m paying ‘margin’ on borrowed/leveraged funding over at my stock-trading account. I could manage the current-account credit balance pretty well so it stayed above zero, since the cash-flow items are predictable and planned. So that £10k excess parked there is costing me the equivalent of what the brokerage account is charging in margin on that sum. Not huge in the scheme of things, but it is another example that highlights the ‘hidden fees’ derived from min. bals.
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Re: Some interesting currency moves today

Postby JR8 » Wed, 11 Mar 2015 11:08 am

Wd40 wrote:Wow, so are they charging you a fee of 0.5% PA for lending money to them? :???:
I thought its only the CHF and DKK that have negative interest rates so for them it makes sense.


Another way in which SG is morphing in to the 'Switzerland of Asia' ... ? :?
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Re: Some interesting currency moves today

Postby Primrose Hill » Wed, 11 Mar 2015 11:29 am

SG has always been a huge washing machine

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Re: Some interesting currency moves today

Postby Wd40 » Wed, 11 Mar 2015 11:35 am

Meanwhile, both US and European markets got roiled overnight. Asia seems to be holding steady so far...fingers crossed!

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Re: Some interesting currency moves today

Postby ScoobyDoes » Wed, 11 Mar 2015 12:14 pm

JR8, many thanks......it's all a little over my head.

I was at UOB for fact finding and certainly, at this moment, there are no such fees......and in general their transaction and banking fees anyway are lower than OCBC so it might be an option to open additional accounts in another bank.

I wonder if a "foreign" bank such as HSBC, StanChart, CS etc. that have far bigger presences in Europe would ever charge something like this here?

I have started offering more product out in SGD since our local operational costs are, of course in SGD so it will go some ways to offset the drop in Euro. Even in Malaysia, Indonesia, Philippines etc. they are relatively okay with accepting offers and making payments in SGD. All my purchases are in Euro so I need to get it in to cover my purchase. Even if I can convert S.E.Asia clients to SGD I am still left with Korea, Japan etc. in Euro with more coming in than I need to pay out. Maybe I start switching those countries to USD instead?
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Re: Some interesting currency moves today

Postby Wd40 » Wed, 11 Mar 2015 2:32 pm

Scooby Does, IMO, most of the damage to the EUR has already been done. The expectation is that the EUR will reach parity by the end of the year, thats a much slower fall. So you need to weigh it out, whether the hassle of changing your billing currency is going to be worth it.

If you are purchasing in EUR and selling in EUR then that is a natural hedge. You should try not to speculate on currency movements, instead try to hedge it out in the easiest/cheapest way possible.

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Re: Some interesting currency moves today

Postby JR8 » Wed, 11 Mar 2015 9:58 pm

'Market overview: Euro keeps dropping like a stone' [From a live commentary feed]
13.12hrs [in London, 9.12pm here]: Euro/dollar continues to drop like a stone and is now to be seen trading below 1.06, off by 0.9% at last count at 1.0586. "After today’s speech it does not appear that Draghi is willing to help prop up the EUR, which the market may see as another reason to sell the single currency," says Kathleen Brooks, Research Director at Forex.com.

- See more at: http://www.digitallook.com/news/market- ... 60293.html

Meanwhile in Germany ...
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Re: Some interesting currency moves today

Postby ScoobyDoes » Thu, 12 Mar 2015 11:16 am

JR8 wrote:'Market overview: Euro keeps dropping like a stone' [From a live commentary feed]
13.12hrs [in London, 9.12pm here]: Euro/dollar continues to drop like a stone and is now to be seen trading below 1.06, off by 0.9% at last count at 1.0586. "After today’s speech it does not appear that Draghi is willing to help prop up the EUR, which the market may see as another reason to sell the single currency," says Kathleen Brooks, Research Director at Forex.com.



I've decided to switch out half our Euro to SGD albeit that it means we "lock-in" previous 20-30% losses it hopefully means we don't loose a huge amount more. We always need SGD anyway, right? It keeps enough Euro for what we need and we, from this month, adjust to the new-norm as China put it last week.

Commentary last night even put the possibility of a 0.85c to USD so even if we didn't act up till now, it's maybe still better than nothing.
'When Lewis Hamilton wins a race he has to thank Vodafone whereas in my day I used to chase the crumpet. I know which era I'd rather race in.'



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Re: Some interesting currency moves today

Postby Wd40 » Thu, 12 Mar 2015 11:30 am

ScoobyDoes wrote:
JR8 wrote:'Market overview: Euro keeps dropping like a stone' [From a live commentary feed]
13.12hrs [in London, 9.12pm here]: Euro/dollar continues to drop like a stone and is now to be seen trading below 1.06, off by 0.9% at last count at 1.0586. "After today’s speech it does not appear that Draghi is willing to help prop up the EUR, which the market may see as another reason to sell the single currency," says Kathleen Brooks, Research Director at Forex.com.



I've decided to switch out half our Euro to SGD albeit that it means we "lock-in" previous 20-30% losses it hopefully means we don't loose a huge amount more. We always need SGD anyway, right? It keeps enough Euro for what we need and we, from this month, adjust to the new-norm as China put it last week.

Commentary last night even put the possibility of a 0.85c to USD so even if we didn't act up till now, it's maybe still better than nothing.


You also pay your suppliers in Euros right? If the amount of Euros in your account is enough to pay suppliers for the rest of the year or less, I would just keep them in EURs instead of having to convert again from SGD to EUR.You are speculating on the currency direction. Also remember, nothing goes down in a straight line, traders may think the fall has been too much too soon and may jack it right back up to 1.10 levels before the next down leg.

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Re: Some interesting currency moves today

Postby JR8 » Thu, 12 Mar 2015 11:43 am

ScoobyDoes wrote:I've decided to switch out half our Euro to SGD albeit that it means we "lock-in" previous 20-30% losses it hopefully means we don't loose a huge amount more. We always need SGD anyway, right? It keeps enough Euro for what we need and we, from this month, adjust to the new-norm as China put it last week.

Commentary last night even put the possibility of a 0.85c to USD so even if we didn't act up till now, it's maybe still better than nothing.


The commentary and opinion was from Jim Cramer on CNBC (per my link of yesterday)
http://en.wikipedia.org/wiki/Jim_Cramer

His opinions are certainly worth carefully considering IME/IMO.
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Re: Some interesting currency moves today

Postby JR8 » Fri, 13 Mar 2015 11:26 am

There seems to be something of an economic 'rebalancing of the chakras' going on in the world today.

This from overnight, re: the state-of-play in the major economies, sums it up pretty well:
http://www.digitallook.com/news/market- ... 61131.html

New York (DJIA) up 1.5% last night.
Nikkei up 1.5%, as of now, the market is currently on 'lunch break'.
Europe - coming up next... :-k [-o<

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Re: Some interesting currency moves today

Postby maneo » Fri, 13 Mar 2015 12:36 pm

ScoobyDoes wrote:I just received a letter from OCBC.....

"Due to the recent monetary policy development in Europe which is causing volatility in the currency markets, we will be revising the monthly service fee for your EUR Account(s) from April 1st 2015:

EUR25,000 and below Waived
Above EUR25,000 0.5% p.a. for a monthly average balance in excess of EUR25,000

To avoid the Service Fee, you may wish to convert and transfer your EURO funds to SGD or USD"

Received this letter, too.
:mad:

Only need to convert the excess over €25K to keep the "monthly average balance" below.
However, if you try to withdraw physical Euros to exchange (e.g. at the Arcade, etc.) the bank will charge you a 0.5% handling fee.
SCB is another one that does this (for Euro and USD accounts, etc.). :x

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Re: Some interesting currency moves today

Postby Wd40 » Fri, 13 Mar 2015 12:52 pm

DBS multicurrency account doesn't have any deposit/withdrawal charges for foreign currency.


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