Why are the bank exchange rates on Arab currency so bad?

[the donger]

I'm currently working in the Gulf for a few months. 

The live market rate is 1 Oman Riyal = 92 THB.

 

Now when I visit Bangkok Banks web page, they offer to buy at 1 = 67.55 THB.

 

It's a huge difference, almost 30% lower than the market rate. What gives?

 

I dont think it is just bangkok bank, I remember similar rates in all the banks last time I visited. 

[Farma]

I learnt many years ago to change middle east currency into or transfer in $US. They are linked to the $US and you get better Baht exchange rates for the $

[the donger]

Just now, Farma said:

I learnt many years ago to change middle east currency into or transfer in $US. They are linked to the $US and you get better Baht exchange rates for the $

Yeah this is a good idea. I'm from the UK so maybe it is cheaper if I transfer money from Omani bank to British bank account, and then purchase baht in thailand with it. Even with the transfer fees I suspect it is cheaper than taking a 30% hit in currency value.

[dabhand]

Super Rich are currently offering close to 92 for Omani Riyals.

 

http://www.superrichthailand.com/exchange

[Pib]

Apparently money exchangers like SuperRick are willing to buy arab currency "notes" at pretty close to the FX rates, but Thai banks are not.  And if wanting to transfers funds via SWIFT to your Thai bank account you are just going to get the crappy rate also.   So, I guess to get a good rate you will have to stuff your money belt, bring over a lot of notes, and then go to a money exchanger with those notes assuming  you don't get robbed first.

 

Exchange Rates in Thailand

https://daytodaydata.net/default.aspx

[the donger]

1 hour ago, dabhand said:

Super Rich are currently offering close to 92 for Omani Riyals.

 

http://www.superrichthailand.com/exchange

That's interesting. Superrich orange also offers 89, which is good enough. How odd that the banks offer such a different rate.

[Wazza1]

22 hours ago, Farma said:

I learnt many years ago to change middle east currency into or transfer in $US. They are linked to the $US and you get better Baht exchange rates for the $

 

Every currency is linked to $U.S, it won't work out that way you will just end up paying extra transfer fees, you would be better off trying to buy Thai Baht at your Oman bank.

[chiang mai]

4 minutes ago, Wazza1 said:

 

Every currency is linked to $U.S, it won't work out that way you will just end up paying extra transfer fees, you would be better off trying to buy Thai Baht at your Oman bank.

 

Nonsense, every currency is not linked to USD, for goodness sake, try telling that to the BOE or the European central bank and you'll get laughed at.!

 

Forex rates for Arab currencies here are so poor because they don't want the currency, they simply can't sell it on, same as any other currency that is in low demand.

[AgMech Cowboy]

It's simple. Neither the banks nor money changers in Thailand want to deal with all the different Middle Eastern currencies. Change your ME money to dollars, euros, pounds or baht before you leave that ME country (or any African country for that matter.)

[Suradit69]

I worked in the Middle East for 10 years and anytime I wanted to transfer money directly to Bangkok Bank I did it in US$. I used Thomas Cook in Abu Dhabi and I don't think they expected anyone to send UAE dirhams out of the country. 

 

Currency notes in particular are a commodity. There just isn't a demand for Omani rials here so the banks expect they would end up sitting on the money for a long time and don't want to be stuck with it, so if they are even willing to accept it, they'll make it as expensive to you as possible. Anytime a bank or currency exchange buys money they want to be able to sell it to someone else as quickly as possible. The same applies to bank transfers.

 

That's also why it's best to buy Thai baht for hard currencies in Thailand. In the US and Europe there isn't that much demand for Thai baht so buying or selling baht will be more expensive to you if it's available at all. It's to compensate the banks for holding a currency they can't trade that quickly.

 

You can see the spread between buying and selling rials is nearly 40%. If they agree to take rials, they want to eventually sell them for 40% more than they paid.

 

 

 

 

 

Edited November 30, 2016 by Suradit69

[the donger]

Thanks for all the great advice. One last thing: 

 

It sounds like the notes themselves are the problem, there isnt a demand for them. So what if I leave some money in my omani bank account.

 

Then if I bring my Omani visa card to pay for certain things (eg dental costs, department store purchases) in Bangkok, what exchange rate will be used? Visa exchange rate + nominal fee, or the banks terrible rate? Could this be a way to convert at closer to market rate?

 

It could be safer than bring wads of USD with me.

Edited November 30, 2016 by the donger

[DSJPC]

because camels are not good collateral!

[jacko45k]

On 29/11/2016 at 7:01 PM, the donger said:

Yeah this is a good idea. I'm from the UK so maybe it is cheaper if I transfer money from Omani bank to British bank account, and then purchase baht in thailand with it. Even with the transfer fees I suspect it is cheaper than taking a 30% hit in currency value.

These days you get more for cash if you don't mind carrying it. So the original US$ cash suggestion may be best. If like me in the ME you have usually more local cash than you need. When you say 'purchase baht in Thailand' how are you doing that? Don't forget the local ATM charge and limited withdrawal amounts makes that a lower rate.

[chiang mai]

6 hours ago, the donger said:

Thanks for all the great advice. One last thing: 

 

It sounds like the notes themselves are the problem, there isnt a demand for them. So what if I leave some money in my omani bank account.

 

Then if I bring my Omani visa card to pay for certain things (eg dental costs, department store purchases) in Bangkok, what exchange rate will be used? Visa exchange rate + nominal fee, or the banks terrible rate? Could this be a way to convert at closer to market rate?

 

It could be safer than bring wads of USD with me.

 

Transaction on your Visa card will use the visa exchange rate so yes, that would work.

 

 

[rott]

You could really ask just "Why are bank exchange rates so bad?".

 

Conversely "Why do the likes of Super Rich and TT give such good rates?"  Superior even to bank TT rates.

[chiang mai]

1 minute ago, rott said:

You could really ask just "Why are bank exchange rates so bad?".

 

Conversely "Why do the likes of Super Rich and TT give such good rates?"  Superior even to bank TT rates.

 

Exchange rates in Thailand are excellent, if you want to see how poor they can get, go to the UK.

[rott]

14 hours ago, chiang mai said:

 

Nonsense, every currency is not linked to USD, for goodness sake, try telling that to the BOE or the European central bank and you'll get laughed at.!

 

Forex rates for Arab currencies here are so poor because they don't want the currency, they simply can't sell it on, same as any other currency that is in low demand.

Why is it then that the sterling/baht rate is a direct link to dollar/baht and sterling/dollar?

[rott]

2 minutes ago, chiang mai said:

 

Exchange rates in Thailand are excellent, if you want to see how poor they can get, go to the UK.

Pointless post, if you do not have an answer to my question just say so.

[chiang mai]

16 minutes ago, rott said:

Why is it then that the sterling/baht rate is a direct link to dollar/baht and sterling/dollar?

 

The Pound does not track USD in any way shape or form.

 

THB does track USD to a lesser extent by virtue of the managed float system.

 

 

 

 

Edited December 1, 2016 by chiang mai

[rott]

You have changed from link to track.

 

The sterling/baht rate is a direct link to the dollar/baht and sterling dollar/rates. It is a simple equation, try it.

[chiang mai]

1 minute ago, rott said:

You have changed from link to track.

 

The sterling/baht rate is a direct link to the dollar/baht and sterling dollar/rates. It is a simple equation, try it.

 

There is no firm link between THB and USD and THB does not firmly track USD, none whatsoever. BOT operates a managed float system which means the central bank intervenes in the forex market to smooth out volatility and to keep THB in broad range in line with ASEAN currencies.

 

There is no link between GBP and USD and GBP does not track USD, GBP moves in line with market forces.

 

There is no link between GBP and THB and neither tracks the other.

 

 

 

 

 

 

[rott]

We are talking about the exchange rate not a fixed link/track between currencies.

 

The gbp/thb rate is a direct reflection of usd/thb and gbp/usd exchange rates.

 

To give you a clue this thread is about exchange rates.

 

Now admit (if only to yourself) that you are wrong and move on. Possibly you can advance some theory as to why there is such a gap between bank exchange rates and the likes of SuperRich (Bangkok) and TT (Pattaya).

Edited December 1, 2016 by rott
spelling/transposition

[chiang mai]

10 minutes ago, rott said:

We are talking about the exchange rate not a fixed link/track between currencies.

 

The gbp/thb rate is a direct reflection of usd/thb and gbp/usd exchange rates.

 

To give you a clue this thread is about exchange rates.

 

Now admit (if only to yourself) that you are wrong and move on. Possibly you can advance some theory as to why there is such a gap between bank exchange rates and the likes of SuperRich (Bangkok) and TT (Pattaya).

 

You need to look at volumes traded globally on the forex of those three currencies, GBP and USD each trade globally in the trillions of Dollars per day, the Baht trades globally in the billions of Baht per day, the impact of THB on its Sterling exchange rate is therefore so small as to be almost not noticeable.

 

As for bank exchange rates in Thailand: typically the difference between bid and offer on a currency that is in demand, such as GBP or USD, is between 50 and 75 satang, players such as Super Rich work on far smaller margins hence their rates are more attractive.

 

Last point then I'll leave you figure out the rest for yourself: BOT holds significant foreign currency reserves which are denominated in a range of currencies but accounted for in USD. As the value of a currency they hold is seen to move they will of course prevent loss by buying or selling, in that respect THB is managed against GBP but the amounts involved with THB have almost no impact on GBP itself.

[chiang mai]

Sorry, almost forgot, I didn't answer your last question:

 

Super rich exchange rates vary by location just likes products stores in many franchises vary their prices based on location.

[rott]

Yes the rate varies by location, which like most (all?) of your answers has nothing to do with the question, e.g. nobody but a total know nothing would buy more than an "emergency" fund of baht in the UK before coming to Thailand. (post no. 16)

 

So if the dollar buys 35.6 baht and the pound buys US$1.25 it will just be coincidence that the pound buys 44.5 baht.

 

And to bring my point down to a level that a child will understand, this will apply pro rata to the the prevailing rate in any given branch.

[chiang mai]

Just now, rott said:

Yes the rate varies by location, which like most (all?) of your answers has nothing to do with the question, e.g. nobody but a total know nothing would buy more than an "emergency" fund of baht in the UK before coming to Thailand. (post no. 16)

 

So if the dollar buys 35.6 baht and the pound buys US$1.25 it will just be coincidence that the pound buys 44.5 baht.

 

And to bring my point down to a level that a child will understand, this will apply pro rata to the the prevailing rate in any given branch.

 

I'm confident rott that you've learned far more in the past hour about this subject than you have ever done previously, but since you're so downright rude in your posts you can go you know what for anything further from me, I'll leave it to others to continue your education!

[rott]

Rude?? Me?? You started it.

 

And in Thailand the gbp/thb rate depends on the usd/thb and gbp/usd rates. It is a simple equation.

 

And I have learnt nothing from you as I do not want to know how to dodge questions that have been asked, answer those that haven't,

ignore accurate statements and generally trail red herrings around.

 

So

[the donger]

Well that escalated quickly.

[siam2007]

On 29/11/2016 at 8:40 PM, the donger said:

That's interesting. Superrich orange also offers 89, which is good enough. How odd that the banks offer such a different rate.

 

 

Superrich "Orange" as you call it, is the ACTUAL ORIGINAL and GENUINE Superrich company.

Superrichthailand is a copycat, but they are very good at marketing and web design, and at the end of the day, competition helps to keep the spread low. I still would use the original Superrich unless their rates are significantly worse.

The copycat Superrichthailand even established their HQ just a few steps away from the genuine Superrich, probably in order to confuse potential customers who is who

[sandyf]

On 12/1/2016 at 10:54 AM, rott said:

Rude?? Me?? You started it.

 

And in Thailand the gbp/thb rate depends on the usd/thb and gbp/usd rates. It is a simple equation.

 

And I have learnt nothing from you as I do not want to know how to dodge questions that have been asked, answer those that haven't,

ignore accurate statements and generally trail red herrings around.

 

So

There is a relationship between GBP/THB and GBP/USD. Thailand holds a large percentage of foreign reserves in USD so if the USD strengthens the THB strengthens on the back of the reserves. The same relationship does not exist in the USD/THB