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International Currency Fluctuations
By Nathan Barcic
So it took you six months, but you have finally found that dream home in the South of France and now need to send the money from home to purchase the property. It sounds straight forward doesn't it? But is the budget you set for your purchase still the same after six months with so many changes in the currency market?
Volatility in the currency market is an undeniable daily occurrence. With a daily turnover in excess of $1.9 trillion and innumerable economic catalysts that cause the market to move, it is impossible to forecast currencies with 100% accuracy. While large corporations employ market professionals to manage billions of dollars worth of currency risk, private individuals purchasing property abroad are often left at the whim of this massive market - uneducated and at risk. More importantly, many investors don't realize how quickly the currency market can move or how these movements directly affect the cost of their property overseas.
Most people in this situation above would simply contact their bank to exchange and transfer their US Dollars for Euros. However, there are huge potential savings to be had by speaking to a 'specialist currency broker'.
Here is an example: A French property priced at $500,000 euros would have cost USD$643,200 in mid-January 2007. Due to a weakening of the USD and a fluctuating exchange rate, by late-July 2007 that same property would have increased in cost to USD$692,500. The difference in cost works out to be USD$49,300, or more than a 7.6% increase in cost in about 6 months. This is a classic example of avoidable currency risk, and it happens all the time.
Specialist currency broker's educate clients on the currency market, secure a better exchange rate than the banks, and transfer funds free of charge. The service is designed to make the currency aspect of an international property purchase as simple, secure, and cost effective as possible.
So in the example above, if the euros had been reserved in January through booking a forward contract, the exchange rate would have been fixed and thus the $49,300 additional cost would have been eliminated.
Copyright HiFx. Whether you are buying property overseas, relocating, or simply need to make regular payments abroad, it is worth learning more about how you can take advantage of the corporate rates of exchange and corporate services offered by HiFX.
Are you exchanging money ?-- do not forget to mention ExpatWomen when you call. Get in touch for free: or Toll Free (866) 744-3987). |
