When you are transferring money, you are basically buying another currency. For example you may be holding ZAR and need to pay a bill in USD. In other words you need to buy USD.
Whilst buying a currency may seem a little different to most purchases you make, it is in effect exactly the same. The item you want to buy has a price tag attached to it and currencies are no different.
When you want to buy a currency, such as USD, this ‘price tag’ is expressed as an exchange rate. For example 17 ZAR = 1 USD. In layman’s terms, one dollar will cost you 17 ZAR.
We all want to get the best exchange rate we can, much in the same way that we are all keen to get the best price for every other item we purchase. Unfortunately seeing what you actually pay when buying another currency is not as simple as when we make other purchases.
To start to understand exchange rates, we first need to look at a few of the terms that are commonly associated with the movement of money.
What should you be looking out for?
The single most important thing to note is the interbank rate. In a perfect world you would conduct all of your transfers at the interbank rate as this is the same rate at which the banks transfer money between each other.
This would be similar to buying a new car at exactly the same price at which the dealer bought it from the maker. Ultimately, it is impossible unless under some very unusual circumstances.
So your aim is fairly simple - you want to transfer your money as close to the interbank rate as possible.
How do you get a rate close to the interbank rate?
A lot of the time the internet is seen as the ‘go to’ resource for ensuring you are being quoted a competitive exchange rate. You can read more about online rates here, but in short, you are more likely to see indicative rates and retail rates on websites. In other words, the opposite end of the interbank rate with very large spreads.
Historically, you will also find that banks have the highest spreads (the worst exchange rates for you, the transferee). In addition, the majority of FX brokers, whether online, or on a person to person basis, also tend to deal at a retail rate level.
With the advent of technology and more competition, there is now the option for you to obtain transparent charging. These means that FX brokers, such as Merchant West Incompass, will tell you the exact spread you are going to pay from the interbank rate.
It is only by dealing with FX brokers, who offer this transparency, that you will know exactly what ‘cost’ is associated with your transfer and that you are getting a competitive exchange rate.
Find out more about how Merchnat West Incompass can help you with transparent charging and market leading rates,coupled with excellent personal service.
Foreign Exchange Rates
When you are transferring money, you are basically buying another currency. For example you may be holding ZAR and need to pay a bill in USD. In other words you need to buy USD.
Whilst buying a currency may seem a little different to most purchases you make, it is in effect exactly the same. The item you want to buy has a price tag attached to it and currencies are no different.
When you want to buy a currency, such as USD, this ‘price tag’ is expressed as an exchange rate. For example 17 ZAR = 1 USD. In layman’s terms, one dollar will cost you 17 ZAR.
We all want to get the best exchange rate we can, much in the same way that we are all keen to get the best price for every other item we purchase. Unfortunately seeing what you actually pay when buying another currency is not as simple as when we make other purchases.
To start to understand exchange rates, we first need to look at a few of the terms that are commonly associated with the movement of money.
What should you be looking out for?
The single most important thing to note is the interbank rate. In a perfect world you would conduct all of your transfers at the interbank rate as this is the same rate at which the banks transfer money between each other.
This would be similar to buying a new car at exactly the same price at which the dealer bought it from the maker. Ultimately, it is impossible unless under some very unusual circumstances.
So your aim is fairly simple - you want to transfer your money as close to the interbank rate as possible.
How do you get a rate close to the interbank rate?
A lot of the time the internet is seen as the ‘go to’ resource for ensuring you are being quoted a competitive exchange rate. You can read more about online rates here, but in short, you are more likely to see indicative rates and retail rates on websites. In other words, the opposite end of the interbank rate with very large spreads.
Historically, you will also find that banks have the highest spreads (the worst exchange rates for you, the transferee). In addition, the majority of FX brokers, whether online, or on a person to person basis, also tend to deal at a retail rate level.
With the advent of technology and more competition, there is now the option for you to obtain transparent charging. These means that FX brokers, such as Merchant West Incompass, will tell you the exact spread you are going to pay from the interbank rate.
It is only by dealing with FX brokers, who offer this transparency, that you will know exactly what ‘cost’ is associated with your transfer and that you are getting a competitive exchange rate.
Find out more about how Merchant West Incompass can help you with transparent charging and market leading rates, coupled with excellent personal service.
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