FOREIGN EXCHANGE INFORMATION

In this section you can find out about the cheapest and simplest way to transfer large amounts of currency all over the world. For smaller transfer amounts see the Money Transfer section.

        

Foreign Exchange

Please note that this section applies to large currency transfers of around €2000 and over.

What Is Foreign Exchange?

Foreign exchange is the conversion between two currencies at any one time. The foreign exchange market also known as the FX market is accessed all over the world by banks, corporations, foreign exchange dealers and brokers and individual investors.

The foreign exchange market has no central exchange forum and most trading takes place electronically via sophisticated online platforms. A foreign exchange trade can occur between any two parties whether they be private or corporate investors, travel companies or banks. Trading always takes place between two currencies which are known as a 'currency pair'. For example, the Canadian dollar is paired with all of the major world currencies including the US dollar, Pounds Sterling, the Euro etc.

What is a Foreign Exchange Service?

Any time you transfer or convert money from one currency to another you will use a foreign exchange service. A foreign exchange service is a is a brokerage firm that specializes in providing currency exchange services for both private and corporate clients. A foreign exchange service will have particular expertise in currency conversion and offer the best exchange rates between all major currencies and a fast, cost-efficient method of transferring currency.

Can I use my Normal Bank?

Yes. Your bank can provide currency transfer services. However, it is generally accepted that currency transfer transactions made through high street banks are more expensive than going to directly to a currency specialist. The transfers often take longer as well.

Why are Banks more Expensive?

Banks are unable to offer the competitive exchange rates of foreign exchange specialists because they have much larger overheads. They do receive the Interbank rate but will take large margin out of this before they pass on the conversion rate to their customer. This leaves the customer with a lower exchange rate. Additionally there may be commission fees and other administration charges.

Foreign Exchange brokerages are experts in currency exchange and focus specifically in this area. They have smaller overheads so the amount which the take from the interbank rate tends to be smaller. This means that they can offer a superior rate to their customers. They do not use anonymous call centres but instead offer a personal service by which each client can reach an expert dealer anytime via the telephone or email.

What Is The Interbank Rate?

The interbank rate is the internal level of interest that is charged on short term loans between large banking corporations. They lend to each other on the Interbank market and it also used for trading foreign currencies. This is the rate that you see when you view live currency charts and it can be used to gauge the best rate.

However, the rate that individual customers receive is never exactly the same as the Interbank rate. As stated above, normal banks take a chunk of this rate to pay for their large overheads while foreign exchange brokers pass on the best part of the rate to their customers.

When Should I Use A Foreign Exchange Service?

Foreign exchange services are the most efficient method of transferring currency to another country. Foreign exchange services are fast, secure and cheap. If you need to set up a regular foreign transaction such as a money transfer to pay an overseas mortgage, or staff, or you are emigrating yourself then this is the best way to do it. No matter what reason if you need to transfer over €2000 a foreign exchange brokerage can offer an excellent service.

If the amount you need to send is not as large as $2000 a small flat fee will usually apply. It is wise to check this in advance. It is usually around €10. If you are looking for an alternative way to move your money then view our Money Transfer area for a range of dedicated companies.

What Is The Transfer Process?

Through this website you can compare some of the best foreign exchange brokerages in Europe. Look at what they offer and find out if there are any fees involved or what commission is charged.

It is very easy to set up an account with a foreign exchange broker. They will usually require your employment details and you will need a bank account in order to make transfers. They will confirm your ID and the arrangements for your account will be made.

From the moment your account is set up you will be able to make transactions. Each time you want transfer your money you will simply need to call or email your broker and announce where and in what currency you wish to send your money. They will quote you the latest exchange rate and if you are happy you will be able to proceed with the payment. The broker will set up a highly secured transfer form, which requires the bank details of your bank and the account you are sending to. The transfer usually takes between 1 and 4 working days.

Corporate Foreign Exchange

Corporate clients are usually offered a separate account service by foreign exchange brokerages. this provides a much more focused service as the corporate client knows that the broker specialises in corporate money transactions and has a high level of expertise in this area.

Corporate clients often require large volumes of currency trade. Many of the larger companies also carry out direct currency trade for investment purposes. For corporate foreign exchange a corporate foreign exchange broker is the best option. They offer extremely competitive rates (usually within 1% of the bank wholesale rate) that are updated frequently and the option to tailor the account precisely to your firm.

If your risk exposure is high, you can organise a bespoke hedging strategy, to minimize your risk level and optimize a good rate for up to two years in advance. You can also choose from other strategic orders, from the complex to the straightforward.

Most corporate foreign exchange services will give the client the option to choose between a bespoke personalized service, with most the of the responsibility taken on by the broker, to a more direct platform that allows the client to trade twenty four hours a day.

        


Please Note: www.whichwaytopay.ie is not authorised to give personal financial advice under the Republic of Ireland’s financial regulations.

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