In 2021, we’ve seen markets steady relative to the huge market volatility we saw last year through the impacts of the global COVID-19 pandemic. However, there have still been large movement in GBP/EUR, which has been as high as 1.1804, and as low as 1.1005 this year. On a €300,000 property, you could see a difference of over £18,000 depending on when you exchanged. This exchange rate discrepancy could be the difference between your dream home falling within your budget, or not.
The current volatility in exchange rates can in fact pose a substantial risk on your property budget and it is important to account for it from the very beginning. However, fluctuations can present an opportunity to increase or maximise the value if the rate movement is in the right direction. If that happens being able to act quickly to take advantage of that movement can be very beneficial.
Exchange rate movements occur quickly and can last for seconds. So in order to improve your chances of taking advantage of a rate movement, it is imperative to be prepared and aware of this.
How to stay ready
Opening an account with a foreign exchange specialist like moneycorp will give you access to free expert guidance and currency tools to monitor the market considering your circumstances, from your budget to your deadlines and your attitude to risk. Furthermore, opening an account doesn’t involve any cost or obligation.
A market order is a currency tool that allows you to target a rate. If the rate agreed is achieved by the market, the order is fulfilled and guaranteed. It could be an attractive resource in times of volatility, especially if you are optimistic that the rate could move to a higher and more desirable level within your timeframe.
Things you need to consider when booking a market order:
- The advantage of a market order is that it allows you to take advantage of a rate movement even if this happens quickly, briefly or whilst we are not at the office.
- You can combine a market order with a stop limit order that allows you to protect your transaction to go below certain rate. These currency tools could be handy for those subject to a strict budget for which a certain drop at the rate could make the transaction unaffordable or too costly.
- Once the order is fulfilled you won’t be able to change it. This means that if the rate moves even higher after your level has been reached you won’t be able to change it.
However, if staying within your budget and peace of mind is more important to you, then a forward contract allows you to secure this. A forward contract allows you to fix a prevailing exchange rate for a future overseas payment. This protects your rate from any upturns or downturns in the market, allowing you to be assured that your home will remain in budget, no matter how the market moves. Should the current rate be favourable to your budget, you can lock the rate and protect it from any movements. This means that should the rate drop, you will still receive the forward exchange rate you locked in.
This works both ways, however, as a disadvantage of a forward contract is that it would provide you with the same agreed exchange rate even if the rate moved even further in your favour by the time it came to settlement.
Forward contracts might not be available through your high street bank or your online provider however they are offered by well-established foreign exchange specialist such as moneycorp.
With a Platinum Trusted Service Award 2020 from independent review site Feefo and 40 years of experience in the industry, FrenchEntree has been recommending moneycorp for more than 15 years. During this time they have helped thousands of client planning the best way to pay for their property as well as supporting them afterwards with any further payment from paying bills, mortgages to repatriating UK pension payments for those who have retired to France.
Furthermore, we have worked with the same person at moneycorp for more than a decade! You might be familiar with her as she often writes for our FrenchEntree magazine. She has 13 years’ experience in foreign exchange, and is a qualified European lawyer with experience in European transactions. Mar will be happy to answer any questions or enquiries to support you through these difficult times
Opening an account is really easy and free of cost. You can register online or over the phone in a couple of minutes and for FrenchEntree there are no transfer fees in any payment.
Open a free account today by clicking here.
Contact moneycorp at 020 3773 6355 or send your enquires here.
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