The foreign exchange marketplace has often featured in the
press in the last few months. Because of
high levels of risk-taking focussed on the euro and high amounts of euro
investments sold off, there have been growing objection to the market as a
whole. Finance ministers across the
European Union have battled for regulatory changes to the market, so that
investors cannot make returns from the credit problems of certain Eurozone
nations.
Whether or not you carry out direct currency trade, it is
probable that you will need to use the currency market at least once in your
life. This could occur in one numerous
ways, including when you purchase a property abroad, go on holiday or
emigrate. In all of these examples, the
currency exchange market plays its part.
For instance, if you purchase a villa in Portugal then you shall be
required to change currencies to be able to pay the overseas home loan. You could do this by going to your local bank
and demanding a transfer of funds but there are now other more cost-effective
ways of transferring money from one currency into another.
One of the quickest and cheapest ways of transferring large
amounts of funds between currencies is by using a foreign exchange
merchant. There are various reasons for
the lower cost, and the core one is focussed around the currency rate that you,
as a customer, are offered. Firstly,
large financial institutions offer their customers a rate which is far worse
than the wholesale rate that they deal to one another – known as the Interbank
rate. Currency brokers can offer much
more competitive rates to you, because they deal principally and directly with
the currency exchange market. In
addition they have lower margins than large financial institutions.
However, it is wise to weigh up forex firms in order to get
the best deal. There are many on the
market, and they usually offer a separate service for their corporate and
private clients. Each day, they post the
currency rate for each currency pair – it is a recommended idea to view these
before using a broker, in order to get the best rate.
Any company that deals with money directly has to be
completely regulated, so ensure that the company is approved by the Financial
Services Authority or the local equivalent.
This guarantees that they have sufficient measures in place to prevent
money laundering and other financial crimes.
No matter what your reasons for needing a foreign exchange
service, it is worth keeping in mind that currency rates are volatile.
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