Whether you own property overseas, work abroad or make international money transfers to friends or family members, it is important to be aware of all the facts concerning currency exchange rates. It may sound easier to let banks oversee your money, but you could actually end up losing a great deal of money on exorbitant FX charges or hidden costs that these institutions secretly charge you.
What are Foreign Exchange Rates?
Foreign exchange rates or FX rates is the value of your currency in comparison to that of a foreign currency. Consider being it the price charged to buy that foreign currency. Therefore, if the USD/EUR exchange rate is 0.86, it means it costs a person 0.86 Euros to buy 1 US Dollar.
How are FX Rates determined?
The supply and demand of currencies determine a forex spot rate. Banks from around the world buy and sell different currencies to meets their customer’s need to trade or exchange one currency. All banks that sell and buy dollars for example, create a supply and demand for US Dollars. Just like in any other market, if the demand for dollars increases, then the dollar will rise in value with respect to other currencies. If on the other hand the demand falls, then the dollar depreciates against other currencies.
What are Interbank Exchange Rates?
Interbank rates are essentially the rates that banks and large financial institutions trade with each other in large amounts. These rates also refer to the price at which banks exchange transactions in both the spot and forward market.
Do banks and online remittance service providers offer real-time rates?
It is most likely that when you go to a bank or use an online provider to exchange currencies, you won’t get the market price the traders get. To make a profit, the bank or remittance office will mark-up the price.
How can you verify the rates are real-time?
Live exchange prices can be checked on various websites such as Bloomberg, Reuters and xe.com. They are considered to be the most reliable source for real-time foreign exchange rates.
As a Vault user, you can benefit from low exchange rates, based on live market rates from the UK Foreign Market during trading hours. Additionally, you can set up or manage exchange rate alerts by simply navigating on the Vault App- Settings – Dynamic FX Rate Alerts. You then select values from Rate Selector and enter your own rate. When your currency reaches your desired rate, you will receive a notification. Don’t lose money on currency exchange, download Vault today!