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Reducing Currency Risks

When moving money around the world, most people focus on speed and the exchange raste received. These are important, but they should also add risk.

Why are people moving currency?

There are, no doubt, hundreds of reasons. For most of our clients it is:

  • because it is because they are buying or selling something - whether goods for themselves or their business or a property abroad
  • because they need to make a mortgage payment on their overseas property
  • because they are living abroad and moving the pension anmd other income to their new home

In each case, there are great opportunities for saving time and money.

Why don't I just use my bank?

Because they, generally, offer uncompetetive exchange rates and high transaction costs.

There are better alternatives.

What other options are available?

For larger sums - say, over £5,000 - specialist Foriegn Exchange (FX) dealers will, usually, offer you a much better exchange rate than your bank. Do not underestimate this. On a transfer of £200,000 the saving can amount to £2,000 or more. That is a lot of money.

For smaller sums - such as the £500 you need to send out to rescue your child who lost his wallet in a bar in Magaluf - services such as MoneyGram (www.moneygram.com) are, probably, the best compromise between speed and cost. This is available from the Post Office and several travel agents.

Getting the best exchange rate

To be more specific, on 8th February 2010 at 2.15pm we ran an anonymous test for the transfer of 250,000 Turkish Lira (TRY) from £s Sterling (GBP):

  • My bank (who shall remain nameless to spare their blushes) offered a rate of RATE
  • A specialist currency dealer offered a rate of RATE

This amounts to a difference of £ AMOUNT in the cost of making the transaction.

Just as importantly, this doesn't take into account the special rates that we obtain when we send out money on our clients behalf. We would have been given a rate of RATE. This would have added an extra AMOUNT to the saving made.

We, generally, arrange transfers on our clients' behalf. This is because we, generally, get a better rate than they do if making the transfer on their own. This is because of the amount of business we do with the FX companies concerned.

Please remember, when comparing rates, that they change by the second. This means that, by the time you have obtained your first quote, the others will have changed - perhaps significantly. This makes comparing rates problematic.

Reducing the Time Taken

Make sure you get the full informmation about the account to which you are sending the money and, where possible, send it by your own electronic banking.

The most useful piece of information is the IBAN code. This international banking code is unique and identifies ithe bank concerned, the account concerned and the customer concerned. Unfortunately, it is not used in all countries.

The time taken by international transfers is frustractingly variable. I have known a tranfers to take 1 hour or 3 days.

If you are in a hurry, allow plenty of time! It is usually the urgent transfers that take the longest.!

Reducing the cost of moving the money

Not only to banks tend to give you a poor exchange rate, they also tend to charge most for making the transfer!

Some currency dealers will make no charge for making the transfer - the cost being included when they calculate the rate given to you.

Shop around!

Reducing risk

There is no point of getting a great exchange rate and no transfer cost if the money doesn't arrive. Make sure you deal with reputable and well established FX companies - preferably ones with fully protected and bonded client accounts. Not all do. Companies do go bust. Customers do lose money.

At the International Law Partnership Ltd we deal with many FX companies but, if our ckients do not specify which company they want us to use, we generally use the services of MoneyCorp.

Next steps

Please look at the Legal Guides, videos, MP3 seminars and other materials set out to the right of this page.

If you would like us to help you, please complete our Client Pack and send it back to us. We will contact you to clarify your requirements and then introduce you to the person most appropriate to deal with your case.

If you do not find the information that you need, please send us an email explaining your problem and we will contact you.

© The International Law Partnership Ltd. Page last revised 8th February 2010.

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