Take Control of Your Currency Exchange Needs

One of the benefits of using a specialist foreign exchange broker is that you have a lot more control over your ability to manage currency fluctuations which, whether you are making regular pension transfers or buying property, can help to give you a bigger bang for your buck.
When using a specialised foreign exchange broker there are numerous tools available to help you manage the damaging affect of currency fluctuations. For example, if you think the pound is set to strengthen against the euro you can arrange your transaction to take place when the rate hits a better level. So if the pound/euro exchange rate is currently 1.10 euros and you think it will rise, you could arrange your currency exchange transaction for when the price hits, say, 1.18 euros. This is called a limit order. Similarly if you feel the currency is set to fall you can agree with your currency exchange provider to exchange your currency before it falls below a level which you are uncomfortable with. For example, if you cannot afford to exchange your pounds into euros when the rate falls below, say, 1.10 euros then you can set this as the minimum rate you want to exchange at. This is called a stop loss order. Of course, this sort of manageability works much better if you are transferring fairly large sums over a period of time. But even for regular pension payment transfers there may be some benefit in using these tools during periods when the exchange rate is fluctuating a lot. In addition, when you do need to transfer money quickly and the exchange rate is moving against you then using a spot contract allows you to take advantage of an immediate price.
So there are plenty of tools in the foreign exchange broker’s box you can take advantage of, but it takes a bit of practise and getting used to the terminology. Here’s our top tips for making the best use of a foreign exchange broker:
1. Think about why you are transacting. Is it regular small payments for, say, pensions or is it large sums for, say, a property transaction over a defined period?
2. Once you have assessed your needs you can then research the tools on offer that can best help you manage these requirements.
3. Get comfortable with the terminology and the meaning of phrases such as stop loss orders, limit orders and spot contracts before any transaction takes place. Don’t be embarrassed to ask your foreign exchange broker for help on the advantages and disadvantages of using these facilities. If they are worth their salt they will be only too happy to help.
4. Don’t be seduced by a ‘no fee’ sales pitch. There may be no commission on buying the currency, but ask whether there are any costs involved in, say, using a limit order and whether there are any transfer fees.
5. While you may enjoy no or limited fees by using a specialised foreign exchange broker, don’t forget that your receiving bank may well impose fees for accepting the transaction. Don’t over look these costs as these will add up, particularly if the transactions are regular and small.
6. If you are committed to regular long term currency transactions then try and negotiate a reduction in transfer costs with your receiving bank. Alternatively, look at ways of reducing the amount of times you make a transfer.

Author : Deborah Benn
Managing Editor

Also see:
Points to Consider when choosing a foreign exchange broker
Currency Consumer protection survey

About Xpatulator

Xpatulator.com is a website that provides international cost of living information and calculators that can help you determine cost of living indexes, cost of living allowances, salary purchasing power and international assignment packages to compensate for cost of living, hardship, and exchange rate differences.
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