About 2 months or so ago, I was trying to buy some physical foriegn currency. I went to travelex and was shocked to find they were charging so far off of spot rate it was criminal. 20%+ in some cases. They also charged a fee for doing the transaction. I have traveled to many other countries and have never seen a foreign exchange charge so much. I then went to bank of America and they wanted 15% off of spot. Any country I have traveled to, I always got pretty close to spot rate, sometimes they charged a fee, sometimes not depending how close to spot it was. So why would it be so expensive to buy hard foreign currency? Well it occurs to me maybe there is a huge demand for foreign currency. Why would there be a demand? I dont know anyone (besides myself) that is buying it. Most "investors/speculators" are just trading forex. It occurs to me that when someone buys something from overseas in foreign currency, these countries are now sending the dollars back in exchange for their own currency. This is the only thing I can think of that would drive the price up so much. Lucky for me I was finally able to set up a foreign bank account in asia and get a rate of about 1 penny for every dollar I exchanged. I really do not like asian banks and any of you have been to anywhere in asia know what im talking about. The teller literally takes an hour to do a simple deposit. I kid you not. (actually it only took them 45 minutes so im exaggerating a bit)
could it be the chinese are looking for another base currency or to diverify because they think the $ is unstable? just a possbility, i know they are telling people to invest in gold perhaps another investment is foreign currency other than the dollar. also funny things are happening in japan perhaps that might be reason too.
travelex is retail ... markups must be at least 300% I had money wired to CCB, sat there 50 minutes waiting.