Making International Payments: The Essentials
Currencies can fluctuate quickly and dramatically, and being aware of how this could affect you is all-important. Whatever the reason for your currency transfer, we’ve put together this short guide to help you with the basics of making an international payment.
By World First.
What are foreign exchange rates?
The exchange rate is determined by the value of one country’s currency against another. A higher rate means more for your money.
What affects foreign exchange rates?
- Inflation rates. If these are low compared with other countries, the exchange rate will tend to be higher. When the rate of inflation is low, exports become more competitive and with it, the demand for, say, euros to buy French goods increases.
- Interest rates. If these are high in relation to other countries, it’s more attractive to deposit money there. There’s a better return from savings, so the demand for that currency is higher.
- Other factors that affect foreign exchange rates include government debt, political stability and government intervention (e.g. a government’s strategy to weaken a currency to make exports more attractive).
Can the rates really make a difference to me?
The rates may vary considerably from day to day. Subtle differences in the value of currencies can make a huge impact on the amount you end up dealing with when it comes to sending money overseas, and things can change over the course of just a few days.
Need to transfer money right away?
Get a rate and make a payment there and then. This is called a spot contract.
Like today’s rate but don’t need to transfer for a while?
Lock in a rate for a payment up to three years in the future. This is called a forward contract. Even if the rates go against you in the meantime, you’ll be unaffected, having already agreed a rate in advance. Good for budgeting too.
Making International Payments: The Essentials By World First.
World First is here to help you make international payments faster, cheaper and easier. With better exchange rates than the banks, you could make significant savings. Plus there are a range of ways in which you can make a payment.World First specialises in assisting private and corporate clients with foreign exchange transactions. If you’d like to know more on how to get cheaper faster currency transfers, click here for more information.