Should recent currency market volatility put the brakes on your international property purchase?
FOR ANY EUROPEAN toying with the idea of buying international property, one event will have dominated their thoughts since the end of July: theukreferendum.
As theukpublic’s decision to leave the EU unfolded on the night ofthe election, Brits watched their foreign currency spending power fall off a cliff. In a matter ofhours the pound plummeted 10% against the US dollar, and over the following week sterling would hit a 30-year low. The euro was by no means immune to the uncertainty either, falling4% from its high as questions were raised about the future of the EU.
For anybody that is used to dealing with currency markets, sudden exchange rate movements are expected. In fact, one could argue that, as Brexit always posed a threat to currencies like the pound and euro it was easier to plan for; adversely, other events, such as natural disasters or the release ofweak economic data, are somewhat harder to predict and can have a disproportionate effect on the markets. One thing is certain though - it can pay to be prepared. But the question is, what can be done to protect against foreign exchange volatility?
Using a foreign currency specialistcould be one answer. Time Magazine has partnered with foreign exchange experts, moneycorp, to bring our readers the Time International Money Transfer Service. With moneycorp, you will be allocated a personal account manager who will provide expert market guidance and assist you with every aspect ofyour currency transaction. They can explain the specialist tools available to help protect you against exchange rate movements, such as a ‘forward contract’ (a forward contract may require a deposit). This allows you to secure an exchange rate for up to two years. So, ifyou’re happy with a rate right now, but don’t need to make your transfer until further down the line – as is often the case when purchasing property – you can fix the current rate and, in doing so, remove any concern that the foreign exchange market will have an impact on the value of your transfer. Uncertainty is likely to prevail in the short-term, meaning the pound could remain volatile against other currencies; particularly the US dollar, which has been one ofthe main beneficiaries ofthe Brexit vote. While the pound and euro are a way off their peaks, when compared to the aftermath ofthe 2008 financial crisis, sterling has fared better against currencies such as ZAR and AUD. As such, it is important to look closer, and to put exchange rates in perspective – perhaps another reason to seek guidance from a specialist. The exchange rate you receive is not just down to markets either. Rates between different providers can vary considerably. For example, through moneycorp our readers get access to exchange rates that are typically 3-4% better than they would get from a bank. Put this into the context ofan international property purchase worth hundreds ofthousands and the difference starts to look more than appealing.
You are also able to execute everything online in the same way that you would with internet banking, buying and selling currency and managing your transfers at the click of a button. moneycorp’s Regular Payment Plan enables you to set up repeat payments at any interval - particularly useful if you have regular transfer commitments, such as repatriating wages in a foreign currency or arranging settlement ofproperty maintenance costs abroad.
“Rates between different providers can vary considerably”
moneycorp is authorised and regulated by the Financial Conduct Authority for the provision of payment services and has been in the foreign exchange business since 1979. To find out more call 0808 159 2529 or email us at email@example.com