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Sometimes when travelling through more than a couple of countries you can end up with currency from a country you visited earlier that has a lousy exchange rate in your current country due to a wide spread but might have a good rate / narrow spread in a country you intend to visit.

I'm wondering if there are some tips for finding out typical exchange rate spreads for various currencies in various countries?

This is my question, below follows my current example, but please don't submit answers that just address the example since I want to know general methods. And of course I realize rates vary in many ways from place to place, bank to bank, etc.

For example I'm left with about $250 worth of Malaysian ringgit in Thailand that I didn't change at the border because I thought I'd be in Bangkok later. It turns out that to change this money to baht in the non-tourist places I've been in will cost about $20 even though spreads for currencies like US dollars are very good.

So I'm wondering if there's a way to see what kind of spread to expect in Laos or China or Burma or Cambodia where I'll be in the coming months and could change my ringgit for the local currency.

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    @pnuts: Actually I'm not looking to foresee the rates but to know how good/bad the spread will typically be for a given currency. I'll edit my question to talk about that specifically. Also relevant would be if commissions are typically charged in certain countries etc.
    – hippietrail
    Dec 17, 2014 at 4:01
  • I don't think there will be any other answer as checking Wikitravel or Travel.SE...
    – Danubian Sailor
    Dec 17, 2014 at 7:48
  • Check a local paper online, it must have exchange rates somewhere in it, you will have two good pieces of information: 1- easily exchangeable currencies, 2- spread
    – Nean Der Thal
    Dec 17, 2014 at 10:42
  • Are you asking how to know if the bid/offer spreads will widen or narrow for a given currency pair? Given alternate trading venues?
    – Gayot Fow
    Dec 17, 2014 at 17:03
  • @GayotFow: No just asking if there's a way to know what spreads for certain currencies tend to be in certain countries.
    – hippietrail
    Dec 17, 2014 at 17:35

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FX spreads will be tight in venues where the currency pair has liquidity, and will be wide where the pair is less liquid. As a general rule, currencies are most liquid in their home country and if you are holding MYR and want THB, you will can expect narrow spreads in Malaysia or Thailand, and wider spreads as you move farther away from those venues.

The MYR/THB spread in China, for example, will be wider than Thailand, but the actual value relies upon interest rates in the two countries, the volatility of the currency pair, and the prevailing conditions in the domestic markets in China. Plus MYR is a so-called 'exotic' currency, which means there are only a few houses willing to even deal it, much less publish prices. So it's an unknown, and in those cases the best predictor of what the spread will be tomorrow is what it is today.

Mark Mayo wrote that you can look at what the MYR/THB spread is for other venues simply by getting a newspaper or looking on the net. That will tell you if MYR/THB is more liquid in Laos, or China, or Burma. Also you can look at research from one of the large houses that publish research. But remember that whenever a bank discovers that it can purchase THB in China and sell it in Thailand for a profit (venue arbitrage), they execute it through their branch offices and the opportunity only lasts for a few moments.

Beyond that if you want to try something more sophisticated, you can take your question to https://quant.stackexchange.com/questions. The tags would be 'fx' https://quant.stackexchange.com/questions/tagged/fx and 'exotics' https://quant.stackexchange.com/questions/tagged/exotics

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  • Lots of good info here but if I were changing my MYR in China I wouldn't be changing it for THB but for CNY. Maybe my wording needs still more fine tuning. I would expect MYR/CNY to have a better spread due to the large number of ethnic Chinese in Malaysia and the close proximity for trading.
    – hippietrail
    Dec 19, 2014 at 7:24
  • @hippietrail, what did this part mean: "... It turns out that to change this money to baht in the non-tourist places I've been in will cost about $20 ..."?
    – Gayot Fow
    Dec 19, 2014 at 10:08
  • That means that I've been to several cities in Thailand that are not tourist destinations and I calculated that to change $250 or so worth of Malaysian ringgit to Thai baht I would end up with about $230 worth of Thai baht, meaning the cost of the transaction is about $20. (USD or AUD, they're close enough and the amounts are not exact). This is a lot higher than I usually "lose" when changing money with more favourable spreads.
    – hippietrail
    Dec 21, 2014 at 15:36
  • I see... Rather than looking at spreads, did you consider measuring relative value? It may be a better option if you are stuck holding MYR.
    – Gayot Fow
    Dec 21, 2014 at 21:10
  • Well I don't expect to return to Malaysia on this trip and I don't plan to return home until I've run out of money. So at the moment this is "dead" money. But for this specific problem I've found there is a real money changer in my current city where the charge to exchange this amount will be about $10.
    – hippietrail
    Dec 22, 2014 at 2:58

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