How to manage exchange rate risk
Whether emigrating, buying a holiday home or purchasing goods from overseas, you can make very significant savings on your transfers by taking some simple steps to make sure you are getting the best deal and managing your exchange rate risk effectively.
Whether a small home based business or a multinational, the efficient management of foreign exchange is a critical factor in the profitability and stability of these businesses.
Getting the Best Deal
Most people don’t realise that they do not need to use their bank for foreign exchange payments and forward contracts. Often just shopping around for the best rate can save clients 1-2% on their transfers. Providers such as NZForex specialise in foreign exchange and work hard to ensure you have a simple, cost effective transfer.
The most common and effective way to manage currency risk is to use forward contracts. These contracts simply allow you to lock in exchange rates for future transfers and can be used for transfers up to 12 months in advance.
Another useful tool is the limit order. Placement of a limit order means you specify your desired exchange rate and should the market price fluctuate to that level, then your foreign exchange provider will automatically purchase the currency for you.
These are effective because you cannot watch the markets every minute of every day and you may miss out an advantageous, but short lived, rate improvement.
NZForex is part of the OzForex Group, which is a strategic investment of Macquarie Bank, Accel Partners and the Carlyle Group. The OzForex Group also includes UKForex, CanadianForex, OzForex, ClearFX and Tranzfers.
Since its launch in 1998, the Group has grown to be one of the world’s largest online foreign exchange companies by offering super competitive exchange rates, great technology and superb service. Offering seamless 24-hour access to Corporate and Private Client Dealers, the OzForex Group completes over 200,000 funds transfers per year on behalf of clients. A combination of knowledge and expertise has made the OzForex Group a significant player in the global foreign exchange marketplace, and one of the world’s leading online foreign exchange services, with over 400,000 visitors per month and more than 100,000 transacting customers globally.
For further information or to organise a transfer, ask me about how NZForex can help?
By Marcus Phillips, Business Development Manager, NZForex
Tags: Exchange Rate, foreign exchange, risk, Savings