One of the key challenges that international businesses face is foreign exchange. When businesses transfer funds from one country to another, they have to deal with currency fluctuations and transfer fees. Here are a few things to have in mind when transferring funds overseas.
Foreign exchange challenges
Very often, businesses sending funds abroad are subject to unexpected currency movements in the values of currencies, which can have a significant impact on their funds. If the market moves against you, your funds by the time they are exchanged into the new currency, might worth less. Or vice versa. If the market moves to your favour, your funds might worth much more. But such movements are unpredictable and currency risks can be mitigated with the help of a currency exchange specialist as Universal Partners FX who can suggest ways to move you funds in the best possible way, securing your transfers and offering valuable support.
Too complex? What contract should you choose?
Choosing the right contract can be daunting and the complicated terminology can be discouraging. A spot contract refers to the exchange of currencies at the current (or “spot”) market rate and the two parties agree to exchange their currencies at a predetermined date. Another type of forex contract is called a forex forward contract. In a forward contract, two parties agree to change the currency at a predetermined date and exchange rate. Similar to forward contracts, forex futures contracts are managed on an exchange. Futures contracts and forward contracts are very safe and can be used to hedge against risk. Your dedicated currency specialist can walk you through your various options and help you choose what is best for your business and specific situation. But whether you choose between forwards, futures, or spots, it is important to understand the way the forex market works and gain a competitive edge in forex that can save you a lot of money.
What is Forex?
Forex, or foreign exchange, is the single largest and most liquid market in the world, with over $6 trillion changing hands every day as foreign exchange is essential to both businesses and individuals. From changing money when visiting another country, to banks trading funds with their customers and other banks, forex transactions are a regular and everyday operation. Forex traders or speculators also trade forex for profit and can do so as part of their profession or as a hobby. Whether professionals or beginners, forex traders earn a profit by buying one form of currency when it is priced low, and then selling it when it rises so they can potentially make a profit. International businesses also exchange money when paying their international suppliers.
Why Currencies Fluctuate?
Several factors affect the value of currencies. Money supply by changing interbank borrowing rates or printing more money can affect the value of a currency. Central banks’ decisions, policies and how much money is available in the market can have an important impact on the value of a currency too. The laws of supply and demand can also change the value a currency, since if a currency is appealing, traders would want to buy it, but if no one needs it, it will decrease in value.
If your business is making an international bank transfer, it is good to seriously consider a currency exchange company such as Universal Partners FX. Currency transfers with UPFX are usually faster, cheaper and equally secure than any bank. You can easily send funds abroad without any hassle and without too many intermediaries.
If you’re transferring funds from or to a foreign bank account, our dedicated customer support team or your personal account manager will explain everything you need to know about making a transfer effectively. You can also use our simple and user-friendly online platform to transfer your funds in a fast, secure and affordable way. Get in touch now with Universal Partners FX and find out how you can make the most of your hard-earned money.