Foreign exchange developments

In the battle to stay ahead in an increasingly crowded marketplace, currency exchange companies are refining the help they can offer those buyers who need to exchange pounds sterling to a foreign currency in order to secure their overseas property.

Step forward RationalFX, which has just launched the UK's first online foreign exchange service. Customers can buy and sell foreign currency in 'real time' using the online trading facility which offers competitive commercial exchange rates.

Rajesh Agrawal, CEO of RationalFX, explains the service as follows: "Our customers can log on and know they will get competitive commercial rates that are better than the tourist rates which the high street banks offer. eTrade can help both private individuals and businesses save money in a variety of situations whether its buying a property overseas, emigrating, paying the tuition fees for studying abroad, making business payments for imports or paying salaries abroad."

Customers can open an account free of charge and are provided with a jargon-free service with no costs (all charges are clearly stated, according to the company). An eTrade account can be opened within 24 hours of registration, both private and business users alike will have access to a number of online trading options such as spot trade, where currency can be traded within 24 hours, to forward trade, where an exchange rate can be fixed up to 24 months in advance. 

The website works on the basis of bids. A bid enables a customer to set up a desired rate in the market over a given period of time. If the bid is achieved then RationalFX will automatically purchase the currency. If the bid is not successful by the selected expiry date, it will disappear. In addition, customers also get free international wire transfers.

Property News, Worldofproperty.co.uk

22 August 2006

RationalFX launches online FX platform for UK consumers

RationalFX, an independent foreign exchange company is pleased to announce the launch of the UK's first ever online foreign exchange service.

Customers can buy and sell foreign currency in 'real time' using the online trading facility which offers competitive commercial exchange rates.

Rajesh Agrawal, CEO of RationalFX comments, "We are very proud to launch eTrade, it is something we have been developing for a while and are delighted to be the first UK company to offer this kind of online trading facility. Our customers can log on and know they will get competitive commercial rates that are better than the tourist rates which the high street banks offer. We all deal with foreign exchange more than we think we do and are directly affected by the exchange rate that we get. eTrade can help both private individuals and businesses save money in a variety of situations whether its buying a property overseas, emigrating, paying the tuition fees for studying abroad, making business payments for imports or paying salaries abroad."

Customers can open an account free of charge and are provided with a jargon free service with no costs. In addition, customers also get free international wire transfers. An eTrade account can be opened within 24 hours of registration, both private and business users alike will have access to a number of online trading options such as spot trade, forward trade, draw down (on a forward trade) and bid (also known as a limit order).

• A spot trade is the most basic and most popular type of transaction allowing customers to transfer currency usually within 24 hours of receipt of payment by RationalFX
• With a forward trade a customer can secure a rate for anything up to twenty-four months down the line and effectively take their risk out of the market. When customers buy forward they are required to pay 10% of the total selling amount within seven working days and the remaining 90% must be fully settled by its expiration date.
• Customers can use the draw down to settle their forward contracts in advance of the expiration date by anything up to three months
• A bid enables a customer to set up a desired rate in the market over a given period of time. If the bid is achieved then RationalFX will automatically purchase the currency. If the bid is not successful by the selected expiry date, it will disappear.

Agrawal adds, "All transactions are confirmed by email and eTrade users can also keep track of their active and historical currency transactions online, which is ideal for accounting purposes. We have made eTrade as user-friendly as possible and is an addition to our well established offline services which includes buying currency via the telephone. Every customer is assigned a dedicated account manager who looks after their currency requirements, providing one to one telephone reports on exchange rates and markets that could have an effect on personal or business decisions."  

Finextra.com

25 August 2006

Boom or Bust

Sterling has had a good time on the world’s money market of late after all the recent hype of how quickly the UK economy is growing and the expectations of how it is looking to perform during the rest of the year by most of the money markets analysts.   This week however the pounds recent surge against nearly all of the major currencies especially the US dollar has come back down to earth with a big bump. The week started brightly enough on Monday with the UK PPI data outperforming the analysts predictions and this saw Sterling continue it’s march against the US dollar to trade back over the 1.90 barrier.  This data however didn’t have the same affect against one of the other major currencies in the world the Euro. This was due to the Euro being buoyed by impressive GDP figures in Germany and the Euro zone as a whole being released. It showed that Germany was now showing its best growth rate in the last 5 years and was very similar to the Euro zone as a whole. This caused many traders to review their expectations for the performance of the Euro for the rest of the year. Causing many analysts to start calling for a rate rise to be due in Europe before too long.  Their recent rate rise was expected in the market place and went virtually unnoticed as it was released at the same time as the surprise increase in the UK, which had more response. Tuesday started to show holes in the argument that had been put forward for the BOE decision to raise rates when the UK CPI figure came in below expectations which made another expected rate rise in the UK later this year look doubtful and started to change the sentiment in the market to the value of Sterling. The US on the same day produced mixed data which gave conflicting opinions to how US economy was currently performing and put them in the same situation as to future rate rises. Wednesday we had the release of the eagerly awaited minutes of the last rate meeting in which a 7-0 vote against rate rises from the previous meeting turned around to a 6-1 vote for a rate increase.  Despite this the minutes were more dovish than what we were expecting. The reasons for increase were given mainly by the concerns for rising energy costs, the housing market picking up again and that inflation was now running at 2.5% well above the target inflation rate of 2.0%. With the UK economy still performing well and worries that average earnings were on the increase that the BOE decided to act sooner rather than later. This early reaction surprised markets who thought that any possible rate rise was a good 2-3 months away. On the other hand the BOE then stated that unemployment was running at it’s highest level since 2000 and any reduction in this figure wasn’t looking to likely in the near future. This prompted the market to revise their expectations of another increase around November time and it is now widely thought that rates will remain at this level for the rest of the year. Thursday then brought a much lower than expected retail sales figure with Sterling again coming under pressure on the money markets. This has now lower Sterling exchange rate down to the same sort of levels of trading that it was at before the rate announcement. The BOE will now be very cautious before making anymore changes to interest rates and it will be keeping a very close eye on the key issues of inflationary pressure. High energy costs, levels of average earnings, strength of housing market and retail sales spending. Also on the world stage the troubled Middle East situation is putting increasing uncertainty into world economies, and this will be closely monitored by the treasury heads of the world’s leading economies. The UK is facing a very similar situation to the US right now that although increasing interest rates will curb inflation worries it could have a harmful affect that it could halt the growth of the economy and very quickly change to situation from boom to bust.

Asian Voice

1 September 2006

Uncertainty is the only certainty there is

Money markets can be very unpredictable and this week has shown how true this can be. The previous week had seen Sterling’s recent advance come to a shuddering halt. The sentiment of the market looks to have changed and the freshness of Sterling seems to have wilted. The week started as it had left off towards the backend of the last week with good news out from Europe in the guise of their improved trade balance which come in well above expectations; and with the UK survey of house prices showing a downturn for the first time in 2 years.

Although this did little for Sterling strength against the Euro, it still held up well against the US Dollar as there are still concerns about the Middle East situation, which in turn brings worries about the oil prices hitting the greenback.

Tuesday however started to show the trend that prevailed for the rest of the week with most of the data released from Germany and the Eurozone as a whole being badly received on the market. This looked as if it was going to see some resurgence in the strength of the dollar especially with the Governor of the Federal Reserve speaking towards the end of the week, but this wasn’t to be.
Although more bad data out of the Eurozone released on Wednesday and Thursday it only slipped slightly against the dollar, as there seemed to be no momentum in the dollar rally and the only real beneficiary seemed to be proud pound. New houses sales in the US gave the indication that the growth in their economy had slowed down and that any future interest rate hikes were now not going to be in the near future. More data released at the end of the week in Europe came in below market expectations causing Sterling to test new highs for the year against the single currency. With the bank holiday looming in the UK, Friday afternoon most dealers were home to a quiet end of the weeks trading but with Mr. Bernanke not coming out with anything new in his address, there was a late sell- off the dollar especially against Sterling and 1.90 for the cable rate was approaching rapidly by the end of the play. With the rates for Sterling against dollar trading at these levels there could be many people in the UK may now start searching for American holiday brochures after the coming months.

Asian Voice

8 September 2006

Don’t get burnt by fluctuating exchange rates

When you invest abroad, be it in a property or business, you will need to make payments in foreign currency. Not many people realise the impact the foreign exchange markets can have on their overseas investments. Hence it is very important to choose your currency provider carefully.

You may ask yourself "why do I need to use a specialist currency provider, when I can just use my bank?" Using an independent currency provider will ensure that you are guided through the process and taken care of through every step. But ultimately, a currency provider could save you hundreds, if not thousands of pounds when making an overseas property purchase.
The global currency market is worth $1.9 trillion US a day and is constantly changing, meaning your rate can literally be lost in the blink of eye. All this can be a little overwhelming even for the very clued up, and this is where independent currency providers come in.  Put simply, these companies behave like big fish in a pond, stimulating the current by buying currency in bulk from the banks and passing on the price benefit to you. Because they’re dealing in much larger amounts than a single individual, they get the best rates and don’t have to settle for the tourist rates that banks dictate to most of their clients.  This difference, between your high street bank and a good independent currency provider can translate into thousands, depending on the amount.
So we’ve seen that the currency market has lots of pitfalls, aside from avoiding paying your bank a comfortable premium for your transfer, the erratic markets aren’t above eating into your hard-earned funds.  Further, few of us have the time to dedicate to watching the markets, and as the exchange rate moves all the time, the sudden fluctuation can make the same property or foreign purchase much more expensive for you.

However, there is a way to avoid that. There are simple tools like Forward contracts, and Limit orders which can be used to avoid risk.  If you need to budget now, a Forward contract is ideal; it cuts out all the worry, and uncertainty, and makes sure that you pay the same price no matter what.

Lets take an example, the price of Euro was 1.4984 against Sterling on the 7th August 2004 and one year later on 7th August 2005 it was 1.4118. The €200,000 that would cost you £133,475.40 in August 2004 would cost you £141, 663.12 in August 2005; that is a difference of £11,187.42!

If you had secured your €200,000 in August 2004, you would have been unaffected by these fluctuations. With most of the currency specialist companies you can secure a rate for anything up to twenty–four months down the line and effectively take the risk out of the market. This means that whatever the currency markets get up to, you know exactly what you will be paying and can plan accordingly. This option gives you the peace of mind that your purchase price will remain secure.

The other benefits of using a reputable currency provider lie in their simplicity. A good one should save you time as well as money, bending over backwards to keep you up-to-date with all aspects of your payment.  They will also be able to ensure that the currency reaches the designated account within 48hrs, as opposed to some banks, which can take anything up to five working days. In fact Euro and US dollar payments have same day value, which means that they can be in the specified account the same day, cutting down on any waiting around, and allowing last minute payments to be made.

Good currency providers will also not charge anything for the use of their services and they can normally provide non-obligatory quotes, putting you in control of your foreign payments.

Asian Voice