Withdrawing money abroad

Question

I am visiting europe but i am using my local bank in my home country. My home country bank cut international withdrawal fee every time i withdraw, thts fine but what i wanted to know, when is it good enough to withdraw money. If Euro is high than PKR or PKR is higher than Euro, i don't understand which will give me more benefit in saving more moeny. What is the logic behind withdrawal money at International ATM. Should be the visiting country money be high or less than your own home country? Also if i go to money exchanger. Which currency should i be looking for, buying or selling?

Answer 1

If I understand right, you're asking whether it's better to withdraw a currency that is more valuable or less valuable, in currency units, than your home country's currency. That is, using your examples, you're asking whether it's better to withdraw euros when the euro is worth more than the Pakistani rupee, or when the euro is worth less.

The answer is that it doesn't matter. What matters is whether the euro is worth more Pakistani rupees than it will be worth later. For instance, suppose that the exchange rate today is such that you can buy 115 PKR for 1 EUR, or equivalently, you can buy 1 EUR for 115 PKR. (Realistically the rates would be different due to conversion fees, but I'll keep it this way for simplicitly.) If tomorrow the exchange rate changes so that you need 120 PKR to buy 1 EUR, then you have to spend more rupees to buy a euro, so this is bad for you; it would have been better to buy earlier (when it was only 115 PKR for a euro). If on the other hand the exchange rate shfits the other way, so that you only need 110 PKR to buy a euro, then this benefits you. because you are spending less than you would have if you had bought earlier. So, in these terms, you want to change rupees into euros when one euro is worth fewer rupees (and you want to change euros into rupees when one euro is worth more rupees).

It doesn't matter how many PKR you spend for a Euro in raw numbers. All that matters is, are you spending more for that one Euro than you would have spent had you bought earlier or later? Indeed, for your specific example, it is unlikely that one Pakistanee rupee will be worth more than one Euro in the foreseeable future; as far as I can see, the Euro has never been worth less than about 50 rupees.

In practice, of course, it's hard to know whether the current rate is "good". You can't easily know how currency rates will change in the future. If you are just visiting for a short period of time, it probably doesn't make sense to worry about the exchange rates. Just take out as much money as you need when you need it. You're just as likely to lose money as to save money if you try to game the exchange rates. If you're staying in a place for a longer period of time, it might be worth pulling a bit extra out at a time when the rate is especially favorable, but you're still unlikely to see major savings in the long run.