We know navigating the property market in another country - and potentially a whole new language - is no small feat.
Together with Lumon we’ve created this guide to currency exchange that covers everything you need to know when buying a property in a foreign currency. From how currency exchange works to knowing when the best time for you to exchange is, and how to decide who you should trust with your international property payment.
Currency exchange involves converting one currency into another at an exchange rate. Exchange rates are determined by supply and demand in the forex market. Currencies are traded in pairs, with a bid price (buying) and an asking price (selling). For example, selling UK Pounds and buying Euros.
The exchange rate moves every 2 seconds, only by a small amount however this movement can add up quickly and make a real impact on your budget.
Exchange rates are determined by supply and demand for currencies in the foreign exchange market. Historically the drivers for change have been referred to as the ‘currency compass’ which includes economic events, political changes, acts of God and central bank decisions.
What is worth noting is that the currency market also prices in expectations meaning that prices could be determined by the provided value, meaning that a change in an expectation from a central bank can have a bigger impact than what you may anticipate.
This is a difficult question to answer but it is worth being aware of your personal risk appetite. As the market continues to move it may be worth asking what the impact would be if the rates move in your favour or against you, especially if you are working towards that dream property purchase in the sun.
If you have a budget and it is available, why would you risk it?.
There are hundreds of potential providers of currency ranging from high street banks to specialist firms. All offer different services and prices in most cases.
Generally, there are three different exchange rates you will come across, the first is the interbank exchange rate or mid-market price. This you will see on Google Finance and is widely reported in the media and is the central exchange rate that banks are transferring billions of currency at. This is not generally available for private consumers, however.
Next is the tourist price and this is what is traditionally offered by the high street banks. They set the exchange rate for a period of time to ensure they are not completing an exchange at a loss, meaning that this is not always the cheapest place to access currency.
The third and last is the commercial rate of exchange which currency specialists can access by trading in the live market.
Please keep in mind that there are risks involved with all financial products. Kyero is acting as an introducer and is not associated with our partners in any other way. Kyero holds no responsibility for the services or knowledge offered by our partners. The content given doesn't constitute advice.
Lumon is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011 (register reference 902022) for the issuing of electronic money.
