Foreign Exchange Transfers: A Currency Labyrinth

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Many individuals working abroad enjoy the premium of earning more due to the power of the currency in the country they are working in.

However, many forget that when they transfer money home, their money has to go through a maze of transfers and fees.

According to Colin Dewar, a former currency dealings manager at Hargreaves Lansdown, “Most people do large currency transactions only a few times in their lifetimes if at all, so they are unfamiliar with the how the currency market works and the companies that operate in them.” Dewar also notes that individuals are unaware that rules for banking and transferring large amounts of cash greatly vary between countries.

A journalist for the Financial Times, Hugo Cox, experienced this first-hand, calling his experience the foreign exchange transfers maze. Cox acquired an inheritance from his late grandmother. His inexperience in transferring large sums of money across the globe cost him a lot of money, and he wasted his time.

He and his mother were not aware of the steps that should have been taken to complete the transactions. He had to spend several days transferring the money due to the bank’s daily limits. He ultimately discovered that his bank’s intermediary bank deducted specific fees.

“There followed weeks of emails and phone calls, with each of the three parties blaming the other until I squeezed out sufficiently detailed records from everyone to identify who was responsible,” notes the journalist.

Cox recommends that people should be “hunting for the best deal is important because exchange rates for large money transfers vary wildly. I ended up paying between 0.1 and 0.3 per cent for my transactions.”

Cox adds that individuals should conduct their due diligence. HSBC provides several tips for sending money abroad:

  • Choose the option that is best for the individual’s needs
  • Meticulously check the exchange rates and fees of the services to be used
  • Plan and time transfer to avoid currency volatility
  • Ensure that all details are correct, and
  • Be mindful of transfer scams.
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