Regardless of whether you are a globetrotting backpacker, traveling salesman or financial trader, as a traveler knowing your exchange rates is of great importance. By failing to know where to go for the best deal, you are essentially throwing your hard-earned money away.
PHOTO Jetset Times SHOPWhat’s more, the foreign exchange market (Forex or ‘FX’) is one of the most volatile in the world. Any given currency can rise or fall dramatically at a moment’s notice because of the sheer volume of traders and the amount of money exchanged.
But by doing your research, understanding currencies, monitoring real-time charts and shopping around, you should always get the best exchange rate.
1. Always Do Your Research
This is your money on the line, so take the time to do some research into your currency, the new currency you want to exchange with and the wider financial markets. It often helps to know some foreign exchange jargon too, which includes:
- Sell rate – What you get when exchanging your currency.
- Buy rate – What you get when exchanging your foreign currency back again.
- Interbank (or bank-to-bank) rate – The wholesale exchange rate that bank uses.
2. Understand Your Currencies
If you are going on a one-off trip to a popular holiday destination, such as the U.S. or Europe, you probably don’t need much knowledge about currencies. However, if you are a serial traveler or want to explore the idea of forex trading, a grasp of foreign currencies is crucial.
For example, the Moroccan Dirham cannot be exchanged internationally, and Cuba has two currencies – one for tourists and one for locals. U.S. dollars are used as a second, often primary, currency in Cambodia and must be in pristine condition for use in Myanmar.
3. Make Sure To Monitor Real-Time Charts
Due to the rate at which currency fluctuates, the price you get will be different from day-to-day. Factors including interest rates, inflation, government policy, employment figures, as well as demand for imports and exports are key influences on FX prices.
By keeping an eye on the news and monitoring real-time charts, you can make an informed decision on when to exchange. Remember to buy when the rate is climbing and your currency is strongest.
4. Shop Around For The Best Rate
If all of the above seems like too much effort, the best piece of advice any forex expert will give you is to shop around. Keep in mind that as currency exchange rates fluctuate, so too will the price boards of providers.
Thankfully, there are numerous comparison websites that provide a broad overview of the main providers. Many of which can deliver currency to your door with the utmost in safety and security if you want the physical cash in question. Just don’t forget to ask for the total rate you will be charged, as providers often add a commission or service fee.
But whatever you do, don’t wait until the airport to exchange currency. The same goes for hotels and foreign banks. Even though this is the most convenient option, it’s also the most expensive almost each and every time – you’re essentially paying for the convenience or, in other words, for failing to plan in advance.
Article written by CHELSEA ELLSWORTH.
