October 21, 2017

Key Factors that Affect Foreign Exchange Rates

When traveling overseas, we are always on the lookout for areas or establishments where we can get the best currency exchange rates. In general, there really is no best way to exchange money. It’s just a matter of finding a reputable establishment that offers competitive rates. Also, there are several key factors that affect foreign exchange rates.

Exchange rates play a significant role not only for travelers but also on businesses. To get the best foreign exchange rates, we need to know the main factors that affect them. For companies, understanding these factors can help them mitigate potential risks that can have an impact to their operations. In this article, let’s take a look at some of these key factors:

Inflation

In general, the lower the inflation rates are in a country, the higher the value of its currency.

Interest rates

These affect foreign exchange rates in the sense that if a country has higher interest rates, it can mean that investors get better returns. This leads to higher-value currency of a country.

Unemployment rates

Even the number of people who have no jobs affects foreign exchange rates. How? If a country has a high unemployment rate, the Central Bank may reduce the interest rates so as not to be an extra burden to an economy that is already facing financial issues.

Stability and economic growth

Investors also look at the level of political stability and economic growth (or lack thereof) of a country. If it posts strong and stable economic growth, currency valuations tend to be stronger.

Account deficit

This means that a country has higher spending (through imports) than earnings (through exports). If this is the case, it needs to get a loan from other countries to pay off the deficit. When that happens, the currency valuations become weak.

Terms of trade

This refers to the price difference of exports and imports. If a country’s exports get a higher price than the price it pays for imports, it is a positive terms of trade, which leads to stronger currency valuations.

Public debt

The level of public debt affects foreign exchange rates in the sense that if a country has large budget deficits and borrows money to pay these off, inflation will tend to rise, which leads to weaker currency valuations.

Do you know other factors that affect foreign exchange rates of a country? Share your ideas in the comments section.

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What You Need to Know about Foreign Exchange

More and more Australians are travelling overseas, thanks to the strong Australian dollar and airfares that have become more affordable. One main consideration when traveling to a different country is how to get the best currency exchange rates. By knowing how far your dollars will get you, you’ll be able to create your travel budget and set expectations when it comes to accommodations, food, transport, shopping, and other expenses while abroad.

Here are some of the things that you need to know about foreign exchange and the best way to exchange money: 

  • Foreign exchange is traded 24/7, around the world. This means that foreign exchange rates can change every minute. These changes may not look much, but it is important to look into it on a regular basis.
  • In most cases, international currencies “float”. This means that their relative value is set by traders who are buying and selling various currencies around the world.
  • One way to get the best currency exchange rates is to check the fees and commissions. Compare the offerings of several providers and choose the one with the lowest possible fee.

What are the best ways to exchange money when traveling overseas? 

  • Buy online. The digital age has enabled foreign exchange to be done online. Aside from convenience, buying currency online usually offers better rates. Just buy in advance as it may take several days before you can get the money from the pick-up location.
  • Go to a specialist money exchanger. If you need larger amounts of certain currencies such as US dollars, heading to a specialist money exchanger in the city can be the cheapest way to buy currency. You can get the best currency exchange rates by shopping around to look for competitive rates.
  • Exchange money through your bank. Some people think that it’s expensive to buy currency in an Australian bank. The truth is, it depends on the currency that you need. For instance, many Australian banks don’t offer competitive rates when it comes to US dollars and Euros. However, you may get the best currency exchange rates when you buy currencies such as South African Rand or Chinese Yuan.
  • Buy currency on your destination. Many countries offer competitive foreign exchange rates and in some cases, buying currency overseas can be a better option compared to doing it before you leave Australia.

Got other ideas on how to get the best currency exchange rates? Share your tips in the comments section. 

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What is Forex trading?

Forex trading – we usually see it on newspapers, TV and online.  At first glance, it’s a series of numbers and charts, as well as names of different countries and their currencies. But what is it exactly? It is the process of buying and selling foreign currencies with the aim of generating profit. It involves speculating the value of one currency compared to another to get the best currency exchange rates.

The foreign exchange market is one of the world’s biggest and fastest-paced markets. Simply put, you may have tried it when you went to another country and exchanged your money. Before that, you most likely looked for the best currency exchange rates to get the most out of your money.

Forex trading is a great opportunity for investors. It is also ideal for those who are looking for another source of income. However, bear in mind that forex trading comes with its own share of risks, so it is important to spend a lot of time in understanding how it works.

Risks in Forex Trading

  • Currency rates are volatile, which means that they go up and down a lot within short periods of time.  This may lead to loss of money on your part.
  • You need to spend a considerable amount of time to track your investment.
  • Politics, economic situation, and confidence in the market are some of the factors that affect currency exchange, which is why markets are very hard to predict.

Things to Consider in Forex Trading

Forex trading offers several benefits, but it can also be a risky endeavour. Minimise the risks by keeping these guidelines in mind:

  • Do your research. Gain knowledge on terms such as foreign exchange, leverage as well as volatility of currencies. Understand how it works and the online platforms that are used for trading. Make sure that you can commit enough time to keep track of your trades.
  • Make sure to read the product disclosure statement carefully before investing. Ask a qualified individual such as your financial adviser about things that you’re not sure of, especially the risks involved.
  • Ensure that the Forex provider that you want to deal with has an Australian Financial Services Licence. You can ask the ASIC Connect’s Professional Registers about it.
  • The reality is, you can lose your investment, so be prepared in case this happens.

Got other tips on Forex trading and the best currency exchange rates? Share your ideas in the comments section.

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Simple Tips for Exchanging Your Money Abroad

If you’re a frequent traveler overseas, you already know by now the importance of finding the best currency exchange rates to get the most out of your Australian dollars. Spending money abroad can be done through a wide range of options. Aside from cash, you can use credit cards, debit cards, traveler’s cheques, and prepaid travel cards. Sad to say, there are some people who do not consider looking for the best foreign exchange rates before and during the trip, making them waste money on unnecessary charges. Here are some simple tips for exchanging your money abroad:

Cash will always be an option

No matter where you go, there will be some establishments that do not accept cards, so it is still best to bring some cash when traveling abroad. Prepare enough cash for expenses for the next two or three days.

Exchange money at the airport

This is another option but bear in mind that it comes with fees and exchange rate profit margins. You can reach out to some airport providers before the trip so they can give you better foreign exchange rates.

Use traveler’s cheques

While most people prefer to use credit and debit cards, there are still some who bring traveler’s cheques with them. It’s a great backup option since if you lose them, the provider will give you a replacement. Just make sure to keep a record of the serial numbers so you will be protected in case of loss or theft. There are also foreign exchange providers that will refund unused cheques without any extra fees.

Exchange money at the bank

In general, banks offer competitive foreign exchange rates and fees, but you can save some cash if you look around first so you can have an idea of how much the current rates are. It is also wise to place your currency order several days before your trip, or even more than a week for exotic currencies since the banks may not have these on hand.

These are some of the simple tips for exchanging money overseas. Knowing the best way to exchange money will definitely help you save money. It pays to include foreign exchange-related matters when planning your trip to avoid any surprises such as high fees and other charges. It is also advisable to bring more than one money option to avoid any inconvenience abroad.

Got other tips on the best way to exchange currency? Share your ideas in the comments section.

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7 Currency Tips for Travelling Overseas

Travelling overseas is a great way to bond and make new memories with family and friends. There are several things to take into account for an overseas trip, from accommodation and flight details to tours and car rental. Another key aspect to consider is currency exchange. Bear in mind that there are fees involved in exchanging currency, and there are many travel options to choose from.

Here are seven currency tips to keep in mind when travelling overseas:

  1. Check the best way to exchange currency in your destination. Part of your trip planning should be knowing how to exchange currency when you get there. It’s always better to be prepared to avoid paying unnecessary fees and inconvenience.
  2. Don’t wait until you’re at the airport to exchange currency.  In general, fees and profit margins are way higher in airports. Whether you’re going to use cash or credit card, you will still pay much more in charges and margins.
  3. Banks usually offer competitive rates but make sure to look at several banks and choose the one that gives the best foreign exchange rates and fees. In general, you will pay about 2.5% higher than the market exchange rates of that particular day. If you’re a regular customer then you may get lower fees.
  4. Consider using a prepaid travel money card. You can convert your Australian dollars into your chosen currency without paying currency conversion fees, unlike when you use your Australian card overseas.
  5. Always bring cash. Don’t rely solely on your debit and credit cards when travelling overseas. There may be transactions that don’t accept cards, so cash can be your best bet.
  6. If you need to use your credit card, bear in mind that transactions come with fees such as cash advance fee for withdrawals and currency conversion fees, not to mention the interest rate.
  7. Place your currency order several days before your overseas trip. Some banks or providers may not have the currency that you need, especially the not so common ones. There can be changes in currency exchange rates by the time you place your order up to the time when you receive your cash.

Avoid the inconvenience and hefty charges when exchanging currency for your overseas trip. Keep these tips in mind to save some cash and get the most out of your pocket money.

Got other tips on how to get the best currency exchange rates when travelling overseas? Share your ideas in the comments section.

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Top 6 Exchange Rate Travel Destinations for Australians

Finding the best currency exchange rates is one of the main considerations when going on a holiday overseas. Of course, you want to get the most out of your hard-earned money, that’s why it is important to look for a travel destination that meets your needs without breaking the bank. In this list, we’ve rounded up six holiday locations that offer the best foreign exchange rates for Australians:

1. South Africa

Australian dollar is strong in South Africa. Just avoid currency exchange outlets in airports. These come with higher fees and commissions and therefore not the best way to exchange money. A trip to South Africa can include a safari in Kruger National Park. You can also go bungee jumping, sky diving, hiking, as well as swimming with sharks if you’re feeling adventurous.

2. Brazil

Australian dollar has been posting a steady increase against Brazilian real, making Brazil a great travel destination that offers the best currency exchange rates. To save money, turn off your mobile global roaming and buy a local SIM card. Consider taking a trip to Copacabana beach and other beautiful beaches of Brazil.

3. Canada

There’s no significant change in exchange rates against Canadian dollar, so this country is still a great travel destination for Australians. Save even more money by paying the essentials before you arrive in Canada to avoid any foreign exchange fees. There are a lot to see and do in Canada. Visit Alberta for the prairie lands. There’s also British Columbia in the western part and Quebec in the east.

4. Argentina

Since mid-2013, the Australian dollar has been strong against the Argentine Peso, so you may want to consider Argentina as your next travel destination. Should you want to rent a car, make sure to return it in the same country. You will pay a lot of dollars if you cross borders.

5. New Zealand

The Australian dollar has been steady in New Zealand, that’s why it’s a favorite destination. In fact, Australians account for the largest inbound tourism market in New Zealand. It is also more accessible now with additional flights from a few budget airlines.

6. Indonesia

The last few years had seen a dip in Indonesian Rupiah against Australian dollar, so Australians can get the most out of their money when they go on a beach holiday in Indonesia. You can also go shopping in Jakarta or Surabaya. One money-saving tip is to plan early to get bargain flights and accommodation.

Got other ideas on travel destinations that offer the best currency exchange rates for Australians? Share your insights in the comments section.

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How to Save on Foreign Exchange when Travelling to the UK

Many Australians choose the United Kingdom as their holiday destination, and for good reasons. UK has so much to offer travelers, making it one of the most popular locations in Europe. Of course, you need to exchange currency when traveling to the UK. But how can you save money on foreign exchange? Here are some tips and things to consider to get the best currency exchange rates when going overseas:

Compare exchange rates and fees

The best way to exchange currency and get the best deal is by comparing exchange rates and charges of several banks and/or currency exchange outlets.

Know your options

Travel cards, credit cards, and debit cards are commonly used by travelers in the UK. While card payments are preferred in the country, it makes sense to still bring cash for certain transactions that don’t accept cards. This is also a wise move in case you encounter problems with ATMs.

Consider travel cards

A travel card enables you to have multiple currencies in one card. You can save money when you spend on a currency that you’ve loaded on to your travel money card since you don’t have to pay the conversion fee, unlike when you use a debit or credit card. Major travel card providers enable you to pre-load the card and spend Pound Sterling. Also, Visa and MasterCard travel cards are widely accepted in the country, while those from American Express and Diners Club may not be accepted in some establishments.

Be aware of card fees

In general, the use of a debit or credit card overseas comes with a fee. The charges vary depending on the bank so make sure to check with your card provider on currency conversion rates, ATM withdrawal fees, and other charges that you may encounter while in the UK.

To save money when traveling overseas, nothing beats careful planning. Since you’re going to use a different currency, do your research and look for the best way to exchange currency so you can get the most out of your money. It is also wise to have more than one way to spend money to avoid inconvenience later on. Ask your bank or card provider and inquire about the best currency exchange rates as well as the fees involved before leaving for the UK.

Do you know other tips on how to get the best currency exchange rates when travelling? Share your ideas in the comments section.

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Travelling to Japan? How to exchange Money from AUD to YEN

For first-time travellers to Japan, may it be for business or pleasure, there are some things you should keep in mind with regards to currency.

It’s a bit surprising to know that despite the very modern life in Japan, credit cards and debit cards are not wildly used in local businesses. Japan is pretty much a cash-based society, unlike in Australia where credit cards are more commonly used.

Before travelling to Japan, here are some things that you should know when it comes to exchanging your AUD to YEN.

Exchange your money in Australia

Even though your Australian dollars can be exchanged at major hotels and banks in Japan, it is best to exchange your currency prior to leaving Australia so you can get a high exchange rate for cash.

XE is a great online currency converter where you can get live exchange rates from AUD to YEN. There are many places you can exchange currency in Australia, from banks to currency exchange outlets. You can also exchange your currencies online from one of the following:

Exchange your money at the Airport

If you prefer to withdraw your money in Japan, you can do so at the airports. Upon arriving, there are several places where you can exchange your currencies. You can do this at one of the bank’s counters or at a foreign exchange counter. Here’s the list of the airports and the locations of the money exchange counters:

Withdraw YEN from ATMs

You generally need cash for your daily expenses in local restaurants, bars, markets and tourist sights. A good thing is that automated teller machines are nearly as common as vending machines in Japan.

Your foreign credit or debit cards can be used at Post Offices and Seven Bank ATMs which you can find at 7-Eleven convenience stores that are available 24/7 across Japan. These ATMs can provide you an English user menu.

Accepted credit cards are VISA, MasterCard, American Express, JCB and China UnionPay. But keep in mind that not all foreign-issued cards are accepted, even though they display the logos.

It’s better to check with your credit card company beforehand to see the locations of each ATM you can use. Make sure that your credit and debit cards can be used abroad and that your bank has been informed that you’re going to use your card overseas, since banks can block a card which is suddenly used abroad, suspecting a fraud.

Final thought

It is highly recommended that you carry cash with you at all times since Japan is a cash-based society. Like anywhere, you have to be careful when you carry a large amount of cash on your person, however in saying that, Japan is a very safe country with a low crime rate. Having a travel card, a plan of where to make withdrawals and knowing the associated costs are very important before you go.

Have you been to Japan? Share with us your experience in the comment section on how you exchanged your money from AUD to YEN.

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Travelling to the USA? 5 Tips when Exchanging Your Money

Travelling to the USA anytime soon? One of the main things to think about before going overseas is the currency exchange. Obviously, it is important to determine the amount of money you will bring, and it pays to get the best currency exchange rates to get the most out of your AUD.

Travel money doesn’t only come in the form of cash. You’ll find that there are several options to choose from, depending on your needs and preferred modes of payment in your destination. But whatever form of travel money you wish to use, finding the best foreign exchange rates will always come into play.

What’s the best way to exchange currency in Australia? Here are five tips when exchanging your money for your USA trip:

  • Know the preferred modes of payment in the USA. Cash, travel card, debit card, and credit card are some of the travel money options to consider. American Express, Visa, and MasterCard are widely accepted. In the USA, you’ll find that most people prefer to use their debit and/or credit cards to make purchases, but having cash will always come in handy especially in certain establishments and stores.
  • Arrange for a cash exchange in advance. You can never go wrong with using cash as it is widely accepted in the USA or any other country for that matter. To get the best currency exchange rates, you can pre-arrange exchanging cash online through a foreign exchange company. You can wait for the best currency exchange rate, and there are no extra fees at the time of purchase.
  • Consider prepaid travel cards. The good thing about a prepaid travel card is it locks in a foreign exchange rate, so when you convert your AUS to USD, you don’t have to pay any currency conversion fee when you use the card and you will not be affected by currency fluctuations.
  • Be aware of international fees. There can be ATM operator fees or withdrawal fees whenever you use your card to access money overseas. Compare cards from several banks and look at the fees involved. But if your card is from Citibank or the Westpac Group, you can avoid paying ATM fees since Citibank, being a global financial institution, has roots in the USA. On the other hand, Westpac Group is allied with the bank of America.
  • Use several travel money products. Each travel money option has its pros and cons, so it is better to use a combination of different products that don’t have currency conversion fees and/or low or zero international ATM withdrawal fees.

Do you know other tips on how to get the best currency exchange rates in Australia? You can share your ideas in the comments section.

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Why People Use Travel Cards for their Holidays

More and more Australians are going on overseas holidays, and the ever growing tourism industry leads to the boom of holiday essentials such as travel cards. A lot of travelers do not go on vacation without a travel card as it offers several benefits that makes even short-term trips more convenient and enjoyable.

There are different travel cards for different types of travelers. To find out which is the best card for you, consider these tips:

Compare travel cards in advance to get the best exchange rate

Travel cards in Australia vary in features and fees so you may want to look at several cards first before your holiday so you can buy what suits your holiday needs.

Opt for a travel card that locks in an exchange rate

Fixed exchange rate means that the amount of foreign currency you have will not fluctuate as the exchange rate changes. It can be one of the best ways to exchange money since you know the exact amount that you can spend during your holiday.

Check what fees are included

Make sure you’re aware of what fees you will be up for when using a travel card. One of the fees to look out for is the reload fee or the amount you pay when you add more money to your card. Some providers do not charge a reload fee, while others offer a flat rate. But there are other providers that do not have a limit on the reload fee so it can be costly.

Buy a travel card that supports multiple currencies

The good thing about having a travel card is that when you convert Australian dollars into another currency, you don’t have to pay conversion fees. This is different from when you use your standard Australian bank cards in a different country where you’ll be charged a fee every time you spend.

Look for a card that can be used in ATMs

Some countries prefer cash over cards, so it is beneficial to have a travel card that is accepted in ATMs overseas. Some providers do not charge a fee when you use your travel card in an ATM. Make sure you check this out first.

Travel cards have become a staple for a lot of travelers. To save money and avoid inconvenience while overseas, it pays to look at different cards and choose what’s suitable for your holiday destination and budget.

Got other ideas on travel cards and best way to exchange currency? You can share your traveler tips in the comments section below.

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