Airport currency exchanges are accused of exploiting the slump in sterling to charge passengers rip-off rates
- Travellers could get more than twice as many dollars before financial crisis
- Airport currency exchange accused of taking advantage of British travellers
- In the worst case, Moneycorp offered a rate of just 0.78 euros for £1 at Stansted
Airport bureaux de change are cashing in on the falling pound by giving holidaymakers paltry rates.
Families travelling from some UK airports yesterday found a pound was worth just 0.78 euros and less than 0.90 US dollars – close to a third less than market exchange rates.
Travellers could get more than twice as many dollars in 2007 before the financial crisis, when the market rate was 2.12.
Airport bureaux de change are cashing in on the falling pound by giving holidaymakers paltry rates
The pound fell to a two-year low against major currencies yesterday after ministers warned that No Deal was becoming increasingly likely on October 31.
Experts accused airport currency exchange firms of cashing in on the slump and taking advantage of British travellers.
Ian Strafford-Taylor, of the travel money firm FairFX, said: ‘Rates at bureau de change desks this morning are some of the worst we’ve seen for the dollar and euro.
‘Airport currency exchange desks are passing on weakened rates to holidaymakers heading into Europe and across the pond for their summer holidays, adding extortionate margins to make a profit.’
In the worst case, Moneycorp offered a rate of just 0.78 euros for £1 at Stansted, almost a third less than the market exchange rate. Customers who exchanged £500 would get just 392.35 euros.
In the worst case, Moneycorp offered a rate of just 0.78 euros for £1 at Stansted
The same bureau de change offered less than 90 US cents for a pound, according to FairFX – 25 per cent less than the market rate, giving just $449.05 for £500.
How traders could make things worse…
The pound could fall even further as hedge funds bet that a No Deal Brexit will unleash chaos, a leading economist has warned.
Sterling faces an extended slump unless Britain is able to reach an agreement with the EU, according to Lord O’Neill.
The former Treasury minister and Goldman Sachs economist said traders expect the currency to drop because of both Brexit woes and Boris Johnson’s plans for a spending spree that could lead to an increase in debt. Lord O’Neill said traders could regard the news as ‘close to a free lunch’.
He added: ‘You’ve got a Government that is deliberately promoting Brexit risk, and one that is talking so adventurously about monetary and fiscal policy too.
‘A lot of them will be saying. “Thank goodness for Boris, he’s giving us a chance to make some money”.’ However, the crossbench peer added that the pound could rise sharply if a Brexit deal is struck, and the Bank of England then decides it has to raise interest rates. A fall in the pound is typically good for exporters – but imported products are more expensive, pushing up shop prices.
The pound’s huge fall after the Brexit vote caused inflation to rise faster than wages.
Unlike normal investment companies, hedge funds can take bets that prices will drop as well as rise. Traders who bet on a Leave outcome made millions as a result.
Martyn James, of the consumer rights website Resolver, said: ‘The plummeting pound is bad news for British holidaymakers, but the outrageous way airport currency exchanges are cashing in on the misery is appalling. I cannot see how such a massive cut in the already low exchange rate is justified.’
Moneycorp at Gatwick was the second most expensive out of ten UK airports, FairFX found. The exchange rate for £1 yesterday was just 0.88 euros and 0.98 dollars. Travellers exchanging £500 would get just €440 or $490.
At the International Currency Exchange (ICE) at Luton and Doncaster Sheffield airports, customers were offered a slightly higher rate that gave them $495 for their £500.
Gatwick earned £26.6million from bureau de change income in the year to the end of March.
Heathrow last published this information in 2016, when it received £50million.
Travellers are advised to plan ahead and buy holiday money elsewhere before going abroad. Traders expect the pound to continue to fluctuate.
Mr Strafford-Taylor said: ‘The threat of a No Deal Brexit leaves the pound on rocky ground. Anything people can do to avoid cash traps, like changing money at the airport, will help them get more for their money.’
Following a sharp drop in the wake of the great recession of 2008 the pound began to recover in the run-up to the EU referendum, before falling again.
Peter Dixon, senior economist at Commerzbank, said: ‘The pound has become an increasingly politicised currency in the sense that it has become ever more sensitive to events in the political sphere rather than the economic fundamentals.
‘Until there is more clarity regarding the impact of Brexit on the economy, the pound will remain vulnerable.’ Pauline Maguire, of Moneycorp, said the reason for its higher airport rates was the costs of operating there, such as ground rent and additional security. She added: ‘Operating costs are higher at Stansted than our other airport outlets. This is reflected in higher exchange rates.’
Travelex said: ‘Our airport rates reflect our convenient, reliable service.’
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