As we all know, there are many important areas to be considered in the process of relocation. From the physical removal of consumer goods, to settling children into new schools, there seems to be a plethora of items to mark on a relocation ‘to do’ list. However, as an expert in currency continually discover that the purchase money for important local actors is often overlooked.
If the transfer of a sum to buy a property along the sea, or simply send a U.S. dollar earnings abroad every month, we have experienced the practice of businesses in general is to stay a little removed from this aspect of the international mission or movement permanent. Simply allowing employees to use their banks to blindly make their own decisions about how they’re going to move their dollars abroad, however, can be an expensive mistake!
Volatility in currency markets is an undeniable and unavoidable event day. With a daily turnover exceeding 1.5 billion dollars and an untold number of factors play into how the market is going through is impossible to predict currency with 100% accuracy. While large companies employ market professionals to manage billions of dollars of currency risk, individuals are often left at the mercy of the uneducated mass market sentiment and risk.
So why should this be a concern?
If you imagine yourself in the shoes of an international civil servant, is quite simple to see how the currency market and exchange rates directly affect your life: When the employer, for example, a U.S. based company, you will receive more than likely your salary in U.S. dollars (USD). This recipe can be deposited into your U.S. account each month or, in an international account that was created in their new country. Either way, you will usually need to replace your income USD to local currency to buy groceries, pay bills and maintain a standard of living.
The process of using your bank can be frustrating and can also be expensive. Think of it this way, every month, you will need to contact your bank to initiate the change of their account of USD in your local account. You will more than likely speak with someone different every time you call and you will definitely receive a different exchange rate each month. On top of all that your bank will charge a fee for electronic transfers ranging from $ 15 – $ 30 per transaction. While the cost of wiring the funds on a regular basis will surely increase with time, the risks they face without knowing what rate you will receive in the future is much more worrisome.
To illustrate let’s assume that you were transferring $ 5,000 in wages for Canada on a monthly basis. In May 2005, USD $ 5,000 would have converted to approximately CAD $ 6,350 at a rate of 1.27. In February 2006, that same USD $ 5,000 would have bought just CAD $ 5.700, a difference of $ 650 CAD per month. Assuming you were using your bank, you would have received a bank transfer fee for each transaction, totaling somewhere around $ 300 – $ 400 in bank fees alone.
The solution is simple: if you want to protect against currency risk, receive better exchange rates and avoid unnecessary costs, do not use your bank! Most individuals in this situation do not realize that there are alternatives to your bank, but using a currency specialist who can actually eliminate the stress and problems of these requirements, these all together. Private Client Services include exchange rates to ensure up to 24 months, setting up direct debits, which will prevent all transfers and the bank receipt charges, and a simple and friendly service that is designed to put customers at ease.
If your employees need to make regular transfers abroad, or are moving large sums of money for their international purchases, it is worth knowing that you can point them toward a world renowned expert currency that understands the relocation process.
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