How Expats Can Protect Against Currency Fluctuations

Thanks to the poor state of the British economy, the pound has been punished repeatedly for the nation’s mistakes and it finds itself languishing weakly against the likes of the euro and the dollar.  For those Britons living abroad, this is very bad news indeed – and for those in the UK who want to perhaps buy a home abroad, it is also frustrating to say the least.

If you’re living overseas in retirement for example, and your pension is paid to you in pounds sterling, the buying power of your pension will suddenly and dramatically have eroded because the value of it has weakened in real terms against the currency in which you’re buying services and goods abroad.

So, in this article we’re going to look at a very important issue, namely how expats can protect against currency fluctuations.  We’re well aware that this is an issue on many expats and would-be expats minds at the moment, and as always we want to provide you with the answers to your dilemmas to enable you to move abroad and enjoy the benefits of the expatriate lifestyle.

In compiling this report today we’re grateful to the assistance of Christina Weisz from Currency Solutions, which is an expert company in foreign exchange matters.  Naturally, when it comes to managing currency fluctuations, this company makes it their business to protect their clients from adverse money movements!  At Shelter Offshore, we’re fortunate to have had their assistance with this report into protecting your own bank account and money matters from adverse currency fluctuations.

Anyone living the expatriate life as well as UK residents on the look out for overseas opportunities such as a well priced property abroad - and even those who frequent travel overseas - will know that there are enough day to day challenges to tackle without worrying about your finances.  However, because the pound is only of real practical use in the UK, anyone with an international lifestyle or outlook is faced with a dilemma at the moment because the pound is so weak compared to many other global currencies.

It was Robert Louis Stevenson who once said that: “to travel hopefully is a better thing than to arrive…” and he’d probably have agreed that to travel without any financial worries or strains would be just as important as travelling hopefully!

So, whether you’re living abroad or looking for overseas opportunities, dealing with currency exchange and making travel money arrangements can be a real headache, but it is possible to make exchange rates go your way, you just need to know where to look for advice and who to call on for assistance.

The first myth to dispel at this point is that your bank offers you the best option for transferring your money.  Whilst this may be true, it is very unlikely to be true!  Your bank is not in the market of currency exchange, what’s more, it is in the market of making money out of people like you who want to send money back and forth overseas.  Banks seldom ever offer the best rates of exchange and they always charge handsomely, not only for changing money from one currency to another, but for sending or receiving money internationally.  Therefore, having discovered that your bank may not be the best place to look for protection against adverse money movements, where should you look?  Well, the answer is in the form of currency specialists such as Currency Solutions – these companies make it their business to get customers the best rates of exchange.

The recent decline of the pound against the euro and the US dollar has underlined the importance of seeking out competitive exchange rates as discussed, but perhaps what’s even more, these days quality advice and guidance is equally as important as getting a good rate of exchange. 

Christina Weisz, Sales Director at Currency Solutions states: “my advice to anyone buying property abroad for example, would be to learn how to get the best exchange rates whilst at the same time protecting their overseas property investment from adverse movements in the market.  For example, you can keep up to speed with rates using the latest technology currency converter which updates you with e-mails and text messages when your currency moves positively or negatively against the currency you’re interested in.”

With nine years experience in dealing with private and corporate foreign exchange transfers, Christina has helped thousands of people to migrate and buy property overseas, so her advice is very sagacious and appropriate.  Now, as the pound feels increasing pressure, she is concerned about clients that need euros for pensions, mortgage payments and living costs, etc., : “The figures tell the story, such expatriate clients are 7% worse off than they were three months ago when we were trading at around 1.1750, 16% worse off than this time last year when the numbers were closer to 1.30 and 25% worse off than in October 2007 when we were trading at approximately 1.45” she explains.  “So, for a client living in France and receiving a pension in pounds on a monthly basis, the amount they are sent in sterling will be the same each month but they will have seen a dramatic fall in its value due to exchange rate volatility.”

It’s certainly no magic trick, it’s just bad news for people who don’t like to see their money disappear with the erosion effects of currency exchange fluctuations.  So, what are the ways to take the sting out of the tail?

Fixing an exchange rate for up to two years with a direct debit coming from your UK based sterling account is a possibility to consider for example.  This solution could cushion you from any nasty bumps in the exchange rate.  This way you’ll also know exactly what you’ll receive each month, whilst also avoiding bank charges that can be anything from £20 a transfer up to a percentage of the amount you move abroad.  Essentially you’re getting a fixed rate that minimises the risk of adverse currency fluctuations, and this can provide considerable savings on pensions and mortgages.

With the ever-gloomy economic raincloud hanging over everyone’s heads at the moment, companies such as Currency Solutions provide different ways to weather the storm.  When seeking these FX companies’ services there are a number of things you should be looking to benefit from: -

First off, the best of these companies execute a large volume of trades, contacting clients when the time is right to exchange money.  Therefore they are always going to be able to offer a better rate of exchange than your high street bank.  So, even when you think your bank is offering a gem of a rate, there could well be a diamond lying in wait for you elsewhere!  It’s also a benefit to have an individual dealer that can assist you personally - again something you rarely get with a bank or any other financial institutions.  “As a company it’s important to know what people want”, says Christina.  “A personal and bespoke service is an important thing when it comes to your money, it’s what anyone at Currency Solutions would want from a financial service and therefore it’s what we choose to provide to our clients.”

So, in conclusion it’s important to know that there are specialists who deal with currency exchange and that they can assist the likes of you and me who may want to make a large one off transfer abroad for a home purchase, or regular monthly transfers for income purposes.  What’s more, there are ways you can protect yourself against adverse movements in the money markets – and all you really need to do is seek out best advice from experts such as Currency Solutions. 

Whilst there are other foreign exchange companies out there, we’re grateful to Christina Weisz of Currency Solutions for her help with this report.  We hope you’ve found it to be of use, but if you do want more information on currency exchange, you can contact Christina or her colleagues on + 44 (0) 7740 0000.