Managing international currencies isn’t just for finance teams, it’s a skill anyone making global transfers should master. Even a small swing in exchange rates could have expensive consequences.
Effective currency management is crucial for global business success. It can help you stay on budget, spend less on transfers and retain your profits.
Let’s break down the complex world of international currency management, so you can navigate it with ease and confidence.
Why international currency management matters
Did you know that exchange rates can change rapidly and are influenced by factors such as, geopolitical events, interest rates or economic indicators?
If your business operates across borders, currency fluctuations could impact your bottom line.
This might not seem like much but think about how many transactions you make in a year. It’s surprising how quickly the savings can add up – every dollar counts when you’re running a business.
5 tips for currency management
1. Using the right transfer type to help you take advantage of currency volatility
Forward Contracts* allow you to lock in a specific rate when you book the transfer, giving you certainty of how much you’ll pay. No surprises.
If you book a Forward Contract, it may mean losing out if the market rate improves because you’re contracted to settle at the agreed rate. Read more.
Limit Orders let you set an ideal rate that will activate your transfer if the rate is reached. If your ideal rate is not reached, the transfer won’t be made. No accidental losses.
If you book a Limit Order, it may mean losing out if the market rate continues to move above your target rate. Read more. There is no guarantee that your desired rate will be reached.
2. Using global currency accounts to save on conversion fees
Having a multi-currency account can simplify payments and save you money. Instead of converting currencies for every transaction (which can be costly), you can hold balances in the currencies you use most.
Making payments from an account that is already in the destination currency helps you avoid unnecessary conversion fees and gives you an opportunity to minimise currency risk. It also means you have the freedom to convert funds when the exchange rate is beneficial to you.
3. Having a trusted FX provider to help you get competitive rates
Working with a provider that has a secure, global network of banks and financial institutions can help you access competitive rates. Plus, having an FX provider you can connect with to answer questions whenever you need help is always a bonus.
4. Using tools and technology to help you monitor trends
Technology can be a game-changer in currency management. By integrating tools that help you monitor rates, view historical rates and watch trends, and make data-driven decisions into your workflow, you can reduce human error and optimise timing for currency trades.
5. Reading currency commentary to stay up to date
Staying up to date with quality currency commentary that gives an overview of yesterday’s market movements, today’s data, upcoming events, and predictions for tomorrow, is a great way to stay up-to-date. Plus, expected trading ranges, paired to USD, EUR, GBP and CAD can help you make transfer decisions. Read our daily AUD or NZD commentary.
We also offer longer term commentary in our Currency Outlook. We provide expert insights of the past few weeks, informed predictions for the weeks ahead and a calendar of upcoming economic events can really help you. Read our Currency Outlook, for monthly currency commentary for EUR, GBP, AUD, NZD, USD, JPY, CAD, SGD and HKD
Take control of your international money transfers with OFX
International currency management doesn’t have to be intimidating. With the right strategies, technology, and the right FX provider, you can make international transfers work for you.
The best place to start is reviewing your current practices and exploring different products. The global marketplace is waiting, make sure you’re prepared to thrive in it.
Learn more about currency management practices
We can help you make the most of currency fluctuations.
IMPORTANT: The contents of this blog do not constitute financial advice and are provided for general information purposes only without taking into account the investment objectives, financial situation and particular needs of any particular person. UKForex Limited (trading as “OFX”) and its affiliates make no recommendation as to the merits of any financial strategy or product referred to in the blog. OFX makes no warranty, express or implied, concerning the suitability, completeness, quality or exactness of the information and models provided in this blog.
