Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

6 Tips For Seamless Business Foreign Exchange

Currencies / Forex Trading Feb 22, 2018 - 03:41 AM GMT

By: Submissions

Currencies

For thousands of Australian individuals and businesses across the country, foreign currency exchange is just a fact of life - and also the cause of many a headache.

Perhaps you're just making a payment for a good or a service that's located overseas.  Perhaps you're sending some cash or a gift to another country, or heading there yourself.  Maybe you're buying foreign land, assets, shares or bonds.  Maybe you're in the foreign market game and you make money from the clever appreciation of currencies.  Or perhaps you're an Australian business that makes money from importing or exporting or transacting with overseas entities.


No matter what category you fit into, not losing money is the absolute priority when it comes from turning one fluctuating currency into another.  For a business, one bad foreign exchange could wipe out a profit, and for an individual it could be the difference between a smart move and a plain rip-off.

So how to navigate this complicated world of foreign exchange?  It's a tedious and time-consuming process of browsing banks and searching for the best exchange rates, and if you skip a beat, the costs can spin out of control.

For business, it can be even trickier.  Fluctuating exchange rates and hidden costs can make doing a deal and clearing a profit almost impossible, detracting from day-to-day operations and making it hard to plan ahead, survive and thrive.

So here are some helpful tips for making the process of foreign exchange more seamless:

1. Be prepared

Arm yourself with knowledge - and for foreign exchange, that 'knowledge' is ever-evolving.

Those currency markets move up and down not only constantly but also sharply and suddenly, often as the result of significant political or economic news.  If you're not sure exactly what the situation is with regards to those markets at the moment of your exchange, stop and take some extra time to make sure you know what you're doing.

2. Understand the 'inter bank' rate

To many people, the exchange rate is just the exchange rate.  But it's really not.

Let's say you're using a bank - say, the Commonwealth Bank - to exchange some money to or from Australia.  The rate that actual bank pays when you order the exchange is called the 'inter bank' rate, so look up what it is when you do your exchange and compare it to what your bank is actually telling you the exchange rate is for you (https://australiancurrencyservices.com.au/au/foreign-exchange/).

3. Shop around

Currency exchange entities including banks, brokers and specialist services are not all made alike, as their rates as well as their fees can differ significantly.

So take the exchange provider you've used before, look into the rates and the fees and then start comparing it with the options.  You can get a wide range of services at a bank like Commonwealth Bank, for example, but CBA exchange rates are often bettered by a foreign currency specialist.  However, if you like who you're using and don't like the idea of change, get in touch and don't be shy to try to negotiate something better.

4. Explore the costs

All too often, foreign exchange services will make a great deal of noise about their awesome rates and stay very quiet about the extra costs. 

So never forget that a less attractive exchange rate allied with a low fee can actually be a significantly better option than an apparently brilliant rate with a suitcase of hidden nasties.  A great way to test this is by looking into exactly what it will cost to do your exchange transaction, and then immediately (hypothetically) change that money back into the original currency.  You might be shocked to discover the size of the bite out of your hard-earned cash.

5. Explore the alternatives

You need to get that money from one country to the other, and exchanging currency in the traditional way can seem like the only option.

But thinking outside the box can save you an awful lot, because what some services offer is not just laughable, it's an offensive rip-off.. 

Peer-to-peer transfer services are becoming ever more popular, but for those doing regular business in a particular country for instance, opening an international bank account may also be something worth looking into.

6. Consolidate

Better organising yourself is an often underestimated way to significantly reduce the costs of exchanging money.

Remember that whoever you're using to help you do your currency exchange is a business, so they're factoring in a margin and paying for staff and overheads.  So the more transactions you can cram into a single transaction, the lower those costs will be.  Some currency exchange providers may even give you a really great deal if you can get the amount of a consolidated transaction over a certain threshold.

7. Communicate

If you're a business and the nature of your game means you're doing a lot of overseas dealing, you may have someone you always turn to for those exchanges.

If that's the case, look into the relationship you have with them and see how it can be improved.  Do they know you and your business inside out?  Are you giving them access to enough information with plenty of time to spare to assess the best options as you go?  Industry professionals have a lot of experience and expertise so you'd be silly to not be fully capitalising on it.

Never forget: with a little bit of knowledge, planning and savvy, ending your headache and capitalising rather than suffering when doing your foreign currency exchanges is more than possible.

By Dominic Raines

© 2018 Copyright Dominic Raines - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in