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Help for the monetarily challenged
April 3, 2011 3:03 AM   Subscribe

A friend, who's as bad at numbers as I am, has money in an American bank account. He needs to pay for something in Switzerland. Is there any advantage to changing the dollars to euros and then to Swiss francs, or is a direct dollar-franc transfer the best way to go?

This is not a question about hedging or speculating or the best time to make the transaction. We just can't get our heads around the math to see which would be the most efficient exchange.
posted by Paris Elk to Work & Money (6 answers total)
 
Transfer it directly to Swiss francs. If you change it to euros first, then you have to cross a buy-sell spread on the USD->EUR transfer, and then another spread on the EUR->CHF transfer; if you go directly USD->CHF, you're only crossing one spread instead of two. (And given that the banks can take 2%, 5% or even more out with each transfer, you want to minimise the number of transfers you go through.)
posted by The Shiny Thing at 3:11 AM on April 3, 2011 [4 favorites]


Everytime you change currency, you pay a cut to the middleman. Eliminate as many middlemen as you can.
posted by hal_c_on at 3:22 AM on April 3, 2011 [2 favorites]


... and check if the seller might be willing to accept USD in payment. If by coincidence the seller is in the market for USD, s/he might be willing to give you a more favourable rate than a bank.
posted by labberdasher at 3:41 AM on April 3, 2011


Direct is best because you pay a fee for each currency exchange.
posted by dfriedman at 4:47 AM on April 3, 2011


There are large numbers of speculators who take any opportunities they can find to profit off discrepancies between the franc/dollar and euro/dollar exchange rates (this is what arbitrage is about). The net result of their activity is that the exchange rates even out over all but the shortest of timeframes (ignoring real changes in the values of the respective currencies, which you've said you're not interested in), and as mentioned above for the purposes of your friend's transaction any difference due to exchange rates will be miniscule compared to the cut the intermediaries will take.
posted by A Thousand Baited Hooks at 4:53 AM on April 3, 2011 [1 favorite]


Thanks everybody. Friend is happy.
posted by Paris Elk at 1:35 AM on April 6, 2011


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