Thu 12th April 2012
In this post I would like to answer the question: When is the best time to look for foreign exchange rates? This might be helpful to you if you need to change currencies, but aren’t familiar with the foreign exchange market, and want to know how to maximise your exchange rate. In addition, for other ways to maximise your exchange rate, you might consider setting up a forward contract (useful if you don’t need to change currencies for some time) and learning how the process works. I hope these pages are helpful for you.
No Best Time?
In short, there is really no such thing as a “best time” to look for foreign exchange rates. This is because the rates change from one day to the next, meaning it is almost impossible to predict what you might get on a given day. For example, to date in 2012 so far the pound to euro rate has been remarkably stable. It’s kept inside a 1.18 to 1.21 four cent range for almost four months on the trot. By contrast, in 2011 the pound to euro rate moved inside a ten cent range, between 1.20 and 1.10. This just goes to show that the rate you get is to some extent determined by what time you need to change currencies. This is how the market works, and there is really nothing to be done about it.
Of course, this does not mean there is nothing you can do to maximise your exchange rate. One of the most useful steps you can take is to research the exchange rates in advance, so that you’re familiar with what’s happening on the market beforehand. For instance, if you look at the pound to euro exchange rate a month before you need to change currencies (rather than just accepting what’s available at the last minute) you’re in a strong position to decide if you look the present rate, or feel it’s worth waiting. That then opens up other options.
Fix The Exchange Rate
For example, if you decide that the present rate is favourable, but do not yet need to change currencies, you might look to fix your exchange rate using a forward contract. Forward contracts enable you to lock in the present exchange rate up to two years in advance, shielding you against potential declines in the rate closer to the transfer date. This does not change the fact that the rate you get is largely determined by market forces, but it does enable you to get a hold of and keep a rate you like.
If you have any other questions about the exchange rate, please do not hesitate to get in touch on +44 (0) 1494 671800 or email firstname.lastname@example.org. You can also visit us at foreign exchange specialist Pure FX. We’d be delighted to help with your enquiry.