The global turmoil created by Covid19 is affecting many aspects of our lives. Some of us are unable to work, working less or from home whilst educating our children. Going to the supermarket has become a big adventure and not only for the long queues we now have to endure! The inability to travel and see people face to face has been a hard test for us but thanks to modern technology, many people and businesses have been able to adapt to keep going – speaking to a loved one on zoom or face time are now uncomplicated daily routines.
Economically however we see a different picture as countries try to plan and forecast for the aftermath of the pandemic. Rescue packages to help businesses and their workforce were put in place by the UK government at the very beginning of this crisis, and weekly measures are put in place in an effort to keep the economy moving.
The foreign exchange market under normal circumstances is a volatile one, but as mentioned above, the current situation has exacerbated that which can be quite unsettling for many people needing to make a payment in another currency.
Let’s look at Sterling-Euro
A couple that found a property in France on 18 February this year and agreed on a price of €250,000, translated into Sterling at that time of approximately £208,000. However, completion was delayed as a consequence of the pandemic. How is this affecting the price?
On the 18 February (1.20): £208,333
On the 18 March (1.05): £238,095
On the 18 April (1.14): £219,298
As the property market is reopening they might be asked to complete the purchase. This week the Sterling against Euro is at levels of 1.12 and therefore the price has again changed and the property would now cost them £223,215.
Foreign exchange is often known as a hidden cost on an overseas property transaction and ignoring it –as we have seen- can be very costly.
So, what can you do to make sure the volatility of the exchange rates don’t end up more costly than they should?
Try to plan and get guidance in advance. High street banks might not offer you that but a foreign exchange specialist such as moneycorp will do that at no cost.
In the example we have seen, our couple would have been able to fix the rate of exchange at the time they signed the agreement by using a forward contract, this would have ensured that the rate would not be affected for the duration of the contract. Or they could have worked with their
assigned dealer to make sure that they were avoiding the rate to go below a certain level where they could no longer afford the purchase. You can find out more about the main currency tools by clicking here.
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 clients plan the best way to pay for their property as well as support them afterwards with any further payments 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 plus she is a qualified European lawyer with experience in European transactions. Mar will be happy to answer any questions or enquiries to support you through this difficult times.
Open a free account today by clicking here.
Contact moneycorp at 020 3773 6355
Send your enquires to Mar at [email protected]