Even something as seemingly complex as managing your currency exchange in relation to an overseas property purchase can be simple and cost effective if you use the right tools for the job. Choosing the right tool will depend on your circumstances, the property you are buying, the convincing process in your chosen country as well as the currency market conditions. But there are some basic principles which will help. This month's blog posting is from Halo Financial. Buying a property, will usually involve a number of payments; either ad hoc or in a stage payment plan. Thankfully, ensuring your budget doesn't get stretched is a relatively simple process. Your initial payments can be booked as 'Spot' transactions. These are agreements to exchange a fixed amount of currency and a set exchange rate within a few days of the contract being struck.
If you want to set the exchange rate for the stage payments, you can do so with what are known as 'Forward' contracts whereby you agree an exchange rate today for a set amount of currency but delay the settlement of the contract until a date up to 2 years in the future. This is a godsend for those who want to cut out all of the currency risk from their plans and it is even more attractive when the exchange rate in question is particularly attractive at the time.
Achieving the best exchange rate for either a Spot or Forward contract is best achieved using another particularly useful tool. The currency market is a 24/7 melee of volatility so catching the best price can be a very hit and miss process. Far better to target an exchange rate which suits your needs and place an ‘Automated’ order into the market at that level which will be triggered if that rate is available anywhere in the world at any time.
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