Foreign currency cash leftover - the pitfall of keeping them

I went to London in March this year (2010) before the change of the UK government. Somehow I was comfortable having plenty of cash than relying on credit card for my financial transactions so I bought quite a lot of sterling at the then exchange rate of about RM5.3 to 5.4 to GBP1 before my departure.

As it was, I was using more of my credit card than the cash in hand so when I returned home I still had plenty of cash in sterling. As my luck would have it, by that time, the exchange rate had fallen to 4.7, no thanks to the high-deficit labour government then and talks of general election in June. So I was saddled with all this cash and would lose had I exchanged them back to Malaysian Ringgit. What was I to do?

Some well meaning friends have asked me to keep them till the exchange rate has gone up but till when? I even met a British engineer on the plane who suggested that I keep them and he was sure the rate would skyrocket in 2012, the year of the Olympics in UK. There would be a lot of interest in things British during the year and many visitors would come and the economy would swell so pound would soar... so sweet of him. Come to think of it, I should have made arrangement with him to get his Ringgit for my Sterling on his way out of Malaysia! But I was thinking of the profit I would make in 2012! ( Though in I was quite mindful of the prediction of the end of the world in December 2012... oh what the heck?).

Last week I needed to liquidate the Sterling as an additional fund to apply for the Pchem IPO. I reckoned  the price upon listing, if I were successful in the application, would somehow make up for the current loss due to lower exchange rate. So I made my way to the money-changers, surveying each one of them, looking for the best rate ( yes even the rate differs by a few sen between money changers, in case you all didn't know). If you changed a substantial amount, a few sen can buy you a meal at Starbucks!

I had all my Sterling in bundles of GBP20 so each bundle of 10 notes made up GBP200. I had stacks of them as a relative had also asked me to exchange for her as well. The lady at the counter used the machine to count them then she went through the notes one by one. I was wondering why she would do that. Then I saw her take out a few from each bundle and later came the shock.... " These old GBP20 notes are no longer accepted by us because there is a directive from the banks a few months ago. You can only change this in UK, the Bank of England" (equivalent to our Bank Negara I supposed). Oh no! When will I  plan to visit London again... not in 2012 certainly as I dislike crowds.

I was rather unhappy with Great Britain for changing their currency notes and actually more with myself for keeping this cash so long. It is not like travellers' cheques. I remember some years ago I misplaced  unused Thomas Cook Travellers' cheques bought at the exchanged rate of RM3 point something, and when I finally found them the rate had gone up to RM7 so I made a lot of profit when I returned them to the bank which issued the cheques! But this time my luck ran out with hard cash.

                          Old GBP20 notes no longer accepted by most local money changers

Not giving up, though my relative said she would go to London early 2011 , I went to another money-changer and meekly asked him whether he would take the old GBP20 notes. He took a look at me then offered at RM3.50 but I said that was too low, what about RM4 as the current exchange rate is RM4.97 and I believe is still going up due to the tight monetary policies of the new British Conservative government. He relented and there I disposed of my old 20 pound sterling notes at a great loss. At least the man accepted to buy them from me. Other money changers just flatly refused.

                                                       This is the new note for GBP20

So the moral of the story, do not try to capitalise on predicted profit when you are holding foreign currency cash as the respective country  can just change the policy on the circulation of their notes and you would be stuck with worthless papers unless you return to that country and visit their central bank.

This reminds me of my sudden discovery of RM1000 note while cleaning the house one day. I remember my husband used to like having them as he had less "weight" to carry. Well after Bank Negara declared that the note was no longer legal tender in Malaysia, he had them all banked in except this particular misplaced one. I found out I could not use it so I went to Bank Negara where I had to fill out a form and told them how I came about the note and where I found it, some time later they gave me 10 RM100 notes... well worth the effort so I understand the Sterling old note fiasco I am facing.

When you travel just change enough to buy small things and for transportation. The rest you can use a credit card.  I did that when I travelled to Bali once but unfortunately many of the shops in Tanah Lot where they sold beautiful handicrafts etc did not accept credit cards!! Till now I regret as I had really wanted to buy a few expensive and exquisite items there but unable to as I had very little  Rupiah and a "worthless" credit card.

Incidentally I still have some GBP50 notes and I asked the money changer whether there was any directive regarding them and he replied in the negative or not yet..... so I would wait a little longer till the exchange rate climbs up to past RM5.00?.... there you are I  still like taking risks.