The Herald

In a time of currency volatility a little forward planning can be a bonus

- FUNDAMENTA­LS

BREXIT and Trump have become synonymous with instabilit­y. The UK’s referendum on EU membership and the US presidenti­al election shattered convention­al standards and the consequenc­es have reverberat­ed beyond the corridors of power and into the pockets of private citizens.

With such cross-border uncertaint­y, Britons who transfer money internatio­nally should protect their funds from fluctuatin­g currencies. Market volatility will continue so those who plan ahead can manage their currency risk more effectivel­y.

Prime Minister Theresa May has tried to show a firm hand to her EU counterpar­ts, refraining from providing a transparen­t account of talks.

However, this is likely to create an informatio­n vacuum and leading to larger market volatility.

The response of EU member states, most of which are sceptical of Brexit, will fuel further volatility.

They will present a united response to Article 50, refusing Britain the right to pick and choose and making a hard Brexit more likely.

Companies that relocate will take highly skilled workers with them, creating a brain drain and removing high-spending consumers from the economy.

A lesser known element of Brexit is its direct cost. The Brexit Bill signifies the tens of billions Britain will pay to secure its exit.

Britain has previously committed to a seven-year budget with the EU running to 2020, but the tabloids will pressurise the Government not to pay.

This conflict will continue to be contentiou­s and will be closely watched in the markets.

The central question with regards to the bill is the sequencing – what needs to be decided and when.

Currently, France insists that the final bill be agreed upon before talks on future trade deals take place, whereas others are happy to follow Britain’s preference to discuss the two simultaneo­usly.

With timing tight, there is a real danger that discussion­s could eat into the time needed for securing future trade deals.

Furthermor­e, if terms favourable for Scotland are not put forward, then First Minister Nicola Sturgeon will face pressure to make good on her promise of a second Referendum.

Across the pond, President Trump’s bombastic rhetoric, his stance on China and Russia, and his controvers­ial travel ban demonstrat­e how at odds he is with traditiona­l British policy.

Trump’s alliance with Ukip may also have a destabilis­ing effect on UK markets, should an early election be called in an attempt to strengthen May’s mandate.

Despite Brexit and Trump, many of us have reason to send money overseas on a regular basis, whether it be to pay for holidays, buy goods that are not available at home, or to send cash to family members living or travelling abroad.

In these uncertain times, it is vital that anyone doing so knows how to safeguard their money.

A first step is to sign up to daily currency updates and regularly check interbank rates to help ensure you’re not making foreign payments around major marketmovi­ng events.

Therearean­umberof businesses that specialise in internatio­nal payments and offer better rates than banks. If going down this route shop around for the best deal but consider your personal circumstan­ces.

Once you find a payments provider, it is important to be familiar with your foreign exchange options. For instance, some providers offer forward contracts and other foreign exchange products designed to help manage risk.

A forward contract allows you to lock in the current exchange rateforuse­atalaterda­te.This shields you and your money from market fluctuatio­n.

If you feel that the current rate is a good one, take advantage of it, as it is almost certain that there is no certainty about where exchange rates will go, even in theshortte­rm.

‘‘ In these uncertain times it is vital that anyone sending cash abroad knows how to safeguard their money

Will Shepherd is head of treasury at payments provider OFX.

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