How to Buy Currency

How to buy currency
The flexible way to buy foreign currency

When buying foreign currency there are a number of factors you need to consider.

* When do I need the foreign currency? - Straightaway, on a specific date, or over a period of time?
* How many payments do I need to make? - A one-off payment or a number of smaller payments?
* How do I protect myself against adverse currency movements? - We can offer you a range of contract types to help you protect yourself against increased costs caused by foreign exchange movements.

Immediate transfers - a quick and easy way to buy foreign currency

Occasions may arise where you need your currency straightaway. This could be because you are about to complete on a property or because you want to take advantage of a favourable exchange rate. In most cases we can convert your money immediately and arrange the onward transfer of your chosen currency on the settlement date - normally just two business days after you place your order. The technical name for this type of instruction is Spot and is simply the quickest way of exchanging one currency for another. A one per cent deposit will be required when you place your order.
Fix the exchange rate

When buying a property abroad, or indeed for any large currency transaction where the payment date is some way off, you need to consider the impact that an adverse exchange rate movement could have on your costs. For example, a property costing £200,000 would have cost £132,722.80 on 23rd June 2005. Just one month later on the 22nd July 2005, the euro had risen in value against the pound and the same property would cost £138,773.24 - over £6,000 more, or 4.56%. Of course, the exchange rate could move in your favour but it is a risk you may not want to take. The Hargreaves Lansdown Currency Service offers you a variety of options giving both the certainty of knowing exactly how much it is going to cost you by fixing the exchange rate from the outset and also the flexibility of a timeframe to suit your needs.

Straight Forward - a simple way to fix the exchange rate

The technical term for fixing the exchange rate for a date in the future is a Forward. It means you can fix the exchange rate today on a transfer you intend to make at a later date. This type of transaction can be particularly important for buying an overseas property when the final payment is not due for several months but you need the certainty of how much the foreign currency is going to cost you in sterling. Forward contracts can be anywhere between three working days and two years ahead. You will be required to make a deposit of typically 10% of the value of your transaction when you place your order. The balance is then payable a few days before the settlement date.

Choosing a timeframe - keeping your options open

When buying a property in either the UK or overseas you are often faced with the problem of the timing of your final payment. It could be the case that you are waiting for a property to be built and you have only been given an approximate date of when it will be completed.

We realise that this can be an inconvenience as you will not always know the exact date on which you will need your foreign currency. This is why we have adapted our standard Forward contract to give the extra flexibility you need. You still have the advantage of fixing the exchange rate but also the added advantage of choosing a time during which your currency can be converted at the fixed rate - for example a three month period. The technical name for this is a Time Option, which simply means you have an option to have your currency paid to you over a set time instead of one final date. You will be required to make a deposit of typically 10% of the value of your transaction when placing your order.
 

If you want a Currency Quotation please follow this link:
Currency Conversion Online - UK based

Article Reference: h-l .co.uk/investment-services/currency-service/our-service/how-to-buy-currency

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