The global money market changes fast, from one minute to the next. If you’re making a big international money transfer, it can be tricky to decide when to do it – what if you’re not ready yet, but the exchange rate seems like it’s going to fall? We’ve got several ways to help you get the rates and security you need.
What is it?
This is when you ask a currency broker to lock a future transfer into the current exchange rate. This can save a lot of money – if, for example, you’d locked in £100,000 in September 2014 for a purchase you were making in Brazilian real that December, you would’ve saved £18,000.
Long-term transactions. If you agree to a purchase that won’t be taking place just yet, you could be hit by changing exchange rates when you make your transfer. As an example, completing property purchases abroad often takes around eight weeks – more than enough time for the markets to change considerably. This is where forward contracts are ideal for guaranteeing stability, particularly in currencies that are subject to major economic or political pressures.
Currency exchange contract
What is it?
This is where you and your broker agree to trade at the current exchange rate during a set period of time. You’ll then be protected against negative movements over this period.
These are great for when you need to make multiple transactions within a certain timeframe and are worried about the exchange rate changing. For example, if you’re paying for something in three instalments, and it just fits in your budget, it’s worth using a currency exchange contract to make sure that you have enough to cover it. It’ll mean that you know in advance how much your final price will be, rather than having to wait and depend on the markets.
What is it?
You nominate an exchange rate that suits you, and your broker will then wait until your currency has reached this rate. The purchase is made automatically, without you needing to monitor the rates.
People who have a sure idea of what they want, but don’t have the time to monitor the money markets. This can be particularly useful when working with volatile currencies – by having an automatic purchase at the rate you want, you don’t have to closely check for exactly the right moment.
A trusted broker can use these tools to provide stability and the best rates for your international purchases. Find the right broker for you today with our comparison tool.