Could someone explain to me this dollar exchange stuff

[murray hill farm]

so..as i understand it, the Euro is approx $1.30 to the dollar..so, that means that i would have to pay $1.30 to exchange for $1 Euro. Ok..that makes sense. I live in Mexico..and the peso is about $1.10 in exchange for $1 dollar..so following the above logic, it should cost me $1.10 dollars to exchange for the approx value in pesos...however, when i go to the ATM here and withdraw $3000 pesos..the equilivant of $300 dollars from my account in the usa, i get the $3000 pesos..and only approx. $265.00 is deducted from my american account..should it not be the other way around...seems like a silly question, i know...but it continues to boggle my mind...ha!

[SweetLeftFoot]

1. Exchange

The answer is to come and live in Britian. Then the answer to these questions is simple. One pound is worth two dollars.

[On the Road]

2. Your ATM Company Got You a Good Exchange Rate

300 Mexican pesos = $265 US

That means you got an exchange rate of about $1.13 (300/265) rather than $1.10. Credit card companies and ATM networks often give better exchange rates than you can get on the streets. That's why I don't take traveler's checks overseas any more.

[murray hill farm]

3. But....

shouldnt it be the other way around...shouldnt it cost me more in american dollars to get the equilivant in pesos?

[Tace]

4. But Mex Peso Is Currently Quoted At $.0896.

So it looks like the ATM is right. You've got the dollar/peso values flipped... I think. Cheers.

On Edit: So your peso is cosing you $08.9 or 8.9 US cents.

[Hamlette]

5. you flipped one of your equations

$1.30 + 1 Euro so if you bought Euros with dollars it would cost you $1.30 for each Euro.

1.10 Peso (actually its 11 Pesos per dollar isn't it?) = $1 so if you bought one dollar it would cost you 11 pesos.

If you are buying pesos with dollars it is 90 cents per 10 pesos.

The equation should look like this:
$1 = .75 Euro (less than one for one)
$1 = 11 pesos (more than one for one)

OR

1 Euro = $1.30
1 Peso = 9 cents
10 Pesos = .90 cents

[murray hill farm]

6. thank you soooooooooo much..ha

yep...thats what i did..flipped on the peso....this has been making me crazy...thank you!

[murray hill farm]

7. So..my next question is..

since i live here in Mexico, would this be a good time to convert or exchange all of my savings to pesos..and keep what i have..what little i have in savings, in Mexico..since the exchange is so good now?

[On the Road]

8. It's the Best Time in Years to Convert Dollars

It would be hard to go wrong. But if you want to take a chance on making more money, you could convert part of it and see if the dollar declines to convert the rest.

Some economists are saying that dollar, but who knows? Conventional wisdom is often wrong.

[murray hill farm]

9. Thanks..good advice!

And i will take it! I have been grappling with this whole question for a while...asking advice, etc..trying to understand the financial questions of what to do, etc...and I got the only understandable and simple and logical and practical advice from DU...Isnt that the best???

[On the Road]

10. Sometimes DU is a Good Souce, But You Always Have to Watch

With investement decisions. It's very difficult to make the right ones because you're in direct competition with professionals all over the world. Financial news sources are almost useless as guides. I don't have that good a record, and I have an MBA and have followed the market for years.

It's definitely a good time to convert some or all of your dollars. If you keep some money in dollars, watch the headlines for the next year or two for a US currency crisis (George Soros thinks there may be one). Once there's a sharp drop, exchange them immediately -- dont' wait, because the dollar is likely to recover from that point.

On the chance that it doesn't happen and the dollar goes up again, it might be wise to pick a point that you'll convert the rest -- maybe a 10-15% gain.

[murray hill farm]

13. Thanks again!

As i mentioned, i have been grappling with this for a while..and it will also make life easier for me to have my money at a local bank here in mexico...and it also feels safer for right now to just move money out of the dollar. I know there are no guarantees, of course..and your thoughts about moving half now, seem prudent...and i appreciate your input very much. Actually...i am on it right now!

[Hamlette]

15. converting to pesos

I'd check the exchange rate historically. I vacation in Mexico every year. Seems like it's been a 9 to 1 exchange rate for a few years at least.

I keep thinking the Euro was a good buy 2-3 years ago but not now.

But I've been saying that for 1-2 years. Wish I'd bought when it was .90 Euro to the dollar. Better return than the market!

[Name removed]

11. Deleted message

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[HamdenRice]

12. And here is why the dollar is falling ...

Imagine that there are two countries, like say China and the US. We are buying some of their stuff with dollars. They turn around and buy some of our stuff with the dollars we just gave them.

Also they buy some of our stuff with Yuan (their money) and we turn around and buy some of their stuff with the Yuan we got from them.

If we buy the same amount of stuff as they buy, then it balances out. But if at the end of the year (or month, or quarter), it turns out that that we bought much more from them and paid them with dollars, than they bought from us, then at the end of the month, there are going to be a lot of left over dollars over there. At some point, if this goes on, we will have left a huge number of dollars over there in China and yet, there is nothing over here that they really want. (They make cool stuff we want; we don't make diddly squat anyone wants except fighter jets and bombs.) People will start to say, geezee what am I going to do with all these dollars? They're useless to me. So the dollar gets in less and less demand and gets cheaper compared to the Yuan.

It's a lot more complicated that that, but that's the gist of it. BTW, when there are a lot of excess dollars over there, on thing they can and do buy is American paper -- ie IOUs or bonds that promise to pay back more dollars. This postpones the day of reckoning. That's why the Chinese and Japanese invest so heavily in American government bonds -- there is nothing else they want to buy with their excess dollars.

<Also, China is a bad example on currency, because their currency doesn't float against the dollar.>

[offcenter]

14. Also

Asian countries have a high savings rate, which ends up in their banks. America is saving 0.2% of income. So the Asian banks invest in US government treasury bonds. The U.S. is attracting 80% of world savings that way.

Well, now the dollar is falling. China, Russia, and India, along with oil rich middle eastern countries are switching their savings from dollars to euros.

BIG trouble for us.

[bush_is_wacko]

16. I have also heard this from numerous sources

Exactly how does one go about converting. Do you just go into a bank and say, I want to convert X amount of money to Euro's?