That might be Shakespeare, not sure, I think it’s from the wrath of khan. Anyway…

Because I’ve been an indie developer for a thousand years, right from back when isildur cut the wrong from saurons hand, I have learned a few lessons, one of them being ‘exchange rate conversion is a bitch’. Because I live in the old world paradise of England, and the global games market is based ‘across the pond’ in the USA, I tend to get paid in dollars. That used to seem ok, because you just converted it to £ and there you go. And yet…. it turns out the exchange rate banks use for this is filed under the ‘exchange rate for dumbass schmucks that have no clue’ folder.

You can get a better rate through dedicated exchange rate companies, which is annoying because it means transferring to them, and then back again to a different account, and in any case beyond a certain minimum amount, you can get a better rate anyway, if you call the bank and ask for it.

So my first step was to set up a dollar bank account, which was an epic tale that makes wagners ‘ring’ cycle look like an episode of antiques roadshow, but I digress…

ach1Now I have a dollar account, and have actually persuaded almost everyone I deal with to pay into it, using dollars (except apple, fuck you apple…), I progress to the next level…

ach2Which is great. Now all I have to do is pick the right moment for the exchange rate, when the pound is really weak against the dollar (so I get lots of pounds). I started looking to pick my moment around October…

chart

Well bugger… It looks like my timing isn’t exactly awesome. My economist head tells me that a booming house market and recovering economy means that speculators suspect UK interest rates will rise before the US, hence people piling into pounds and making them expensive. Grrrr. It’s basically moved from 1.6 to 1.7, so roughly 6% of my earnings over the last 8 months have evaporated in exchange rates. That sounds worse than it is, because the default exchange-rate losses from a normal bank account are *so bad* I would probably be losing 3-4% on them anyway.

Plus it’s not all doom and gloom, the last week or two has shown it sliding back in the ‘right’ direction. I just hope it slides a bit further before I have to start eating the carpet or convert some dollars… If only the UK economy would implode and us be plunged into economic letdown here, things might improve from my POV. Or as Garak put it…

How thoughtless of me not to consider the effects the destruction of my home world would have on your business; These must be trying times for you, be brave.”

 

 

8 Responses to “Exchange rates…from hells heart I stab at thee…”

  1. Blaze says:

    Being stuck between two big currencies must be horrible :D I’m already unhappy with the rate that paypal uses when exchanging Dollar into Euro (and the bite they take for themselves when I recieve a transfer), but with bigger numbers it must be a real pain, seeing all the money go down the drain without anything you can do really.

  2. Bram says:

    Maybe delay the conversion? Open up an online stock trading account, and buy dividend paying stock. As the dividends are paid out, you convert to sterling and transfer. In best case scenario, your stock and your yield will grow strongly over time, and maybe the exchange rate will improve over time as well. Double whammy, as long as you have some reserves to ride it out.

    Or focus more on iOS. Apple converts my earnings and sends me CAD. I’m pretty sure Apple uses a fair rate. But also, I’ve been lucky with the weakened CAD.

  3. Chris says:

    Cliff, look into hedging against currency exchange risk. Most multi-nationals do it, but I’m not sure how well the practice scales for indies. It may be cheaper than bearing the risk. Plenty of articles on Google, e.g. http://www.investopedia.com/articles/forex/09/exchange-rate-risk-currency-etf.asp

  4. [quote]
    and in any case beyond a certain minimum amount, you can get a better rate anyway, if you call the bank and ask for it.[/quote]

    O_O

    That’s actually a THING!?

    Bloody banks, if interest rates rise a percent are they gonna pass this on to savers? Are they bollocks like, I bet they’ll keep it. er … /rant.

  5. cliffski says:

    oh it’s definitely a thing. I called the bank today to check, and it is noticeably better than the headline rate, but only kicks in at transfers over £25,000.

  6. mrstarware says:

    What about converting to *coin from dollars, and then immediately from *coin into pounds? What’s the exchange rate there? Or even gold? Maybe ship it?

    *bit, lite, etc.

  7. Andrew Fray says:

    I’m in the same boat. Although I was never brave enough to stockpile USD and wait for the right moment; I just transferred everything every month.

    Khan is quoting Moby Dick in that final scene, btw. Why Ahab was searching for “the override” on a 19th century whaler I have no idea.

  8. ac says:

    Well you can get the right-now rate at a proper broker (well sometimes the fx futures seem to act bit differently than the cash fx instrument, given they are disconnected yet supposedly the same thing, leading to banks/hft arbing it).

    Interactive Brokers has one free withdrawal/month. Total fee one-way for pretty much anything (fx, stocks, futures, options etc) is 1-3$ for amounts below around $60k. Accounts opened from UK & US site can be subject to US limitations that prevent short term trading for small accounts (though I’m pretty sure this limitation is only for margin accounts, the cash accounts have other limitations that prevent short term trades). I read accs opened from .ca site may have less limitations but I’m not sure if you can get free withdrawal from it to EU bank like from the UK subsidiary.

    I could go on and on what I learned about trading in past couple years of studying it all the way from buy and hold to buy and hold for a second level. Perhaps the most interesting thing I heard about and *think* I have witnessed (hard to quantify!) is that you can’t really *only* backtest trading because when you buy large enough amount or use margin, the banks/market maker algos will react to that. And just like in a brick and mortar store – the stuff is rarely discounted and even when it is, they’re still probably not making a loss on it – meaning that if you buy at discounted price, there may still be room to go lower!