Migration News - Immigration news and information on how to emigrate to Canada.

Top Relocation Tips - Buying Dollars

Foreign Exchange

Once you have decided to emigrate, and you have sorted out all of the legalities, the next stage would be to find a suitable foreign exchange provider. You may ask yourself “why do I need to do this, when I can just use my bank?”  Using a currency provider like RationalFX will ensure that you are guided through the process and taken care of through every step. But ultimately the currency provider could save you hundreds, if not thousands of pounds when purchasing your house.

How do currency price fluctuations affect you?

Let’s take an example, you are a British resident and you are re-locating to Australia. You have sold your property in the UK and have accumulated a nice amount to take you across and live comfortably! However, the amount of Australian Dollars you get will seriously be affected by the exchange rate you receive on the day you decide to move your funds. So, if Pound Sterling strengthens during the time it takes for you to sell your property etc, you will receive more AUD for your pound but, if AUD strengthens then your costs will increase and you will not receive as many AUD as you originally expected!

Now, Just to give you an idea of the potential loss you could incur, the price of buying AUD was 2.52 to the pound on the In January 2007; and six months later, on 1st July 2007 it was 2.32 to the pound. The ﾣ200,000  property you sold that would have bought you AUD 504,000 ended up only buying you AUD 464,000. A loss of AUD 40,000! With Rational FX, you can fix the rates for up to 5 years in the future. We can watch the market on your behalf and guarantee that we will give you a better rate than the bank.

What tools are available to manage this risk?

RationalFX can offer three types of contracts. We will understand your requirements and outline the best options; below is a brief description of various available contract types:

Spot

This is the most basic and popular type of transaction. It’s a basic “buy now, pay now” system. This is done when the client wants to purchase the currency at “today’s” rate, the client should arrange to have cleared funds in our account within 48 hours. We will then transfer the agreed amount of currency to the account specified by the client. It will take anything up to two working days to clear the funds in the foreign account.

Forward

This is when the client can secure themselves into a rate for anything up to five years down the line. The main difference between forward and spot being, it uses a “buy now, pay later” system. As currency markets tend to fluctuate, this can seriously affect the cost of whatever you wish to purchase. That’s why a forward transaction can be used to take the clients risk out of the market.

Stop Loss/Limit orders

In this type of contract, you place an order with your desired exchange rate “upper limit”; you can also secure yourself against a downside in the market (stop) by also specifying a “lower limit”. As soon as the market hits that rate, be it any time of the day, the currency is automatically bought for you.

For more information contact RationalFX today.