A forward contract does allow you to fix an exchange rate for a certain amount of time but it’s worth noting that this will require a deposit and it’s not the only way to manage volatility in the currency market. You can track and target specific rates which may offer value without committing your funds in the same way as a forward contract.
Market orders and limit orders
If you have specific commitments, such as paying an overseas mortgage, tuition fees or supporting a family member back home, you don’t always have the luxury of waiting until the market is in your favour. A market order allows you to set an ideal rate of exchange and if that rate is reached, the requested currency will be exchanged on your account. You can also pair this with a limit order, which specifies the lowest possible limit you’re comfortable with for exchanging currency. This means that you can limit the cost of your international payments to within a budget that you’re comfortable with.
If you don’t want to commit the funds required for a market order, another option is to set up a rate tracker. This allows you to request alerts by email or text (or both if you really need to know) and you can specify a rate that you’d like to be notified about. You can set up a number of alerts looking at different rates and different currencies. You can also specify the time frame you’d like them to run - whether that’s a short term search for the best rate over a week or a month or regular alerts throughout the year whenever your ideal rate is reached.
What’s the difference between placing a market order and tracking a rate?
The key difference is that a market order is an automated process and the funds are exchanged as soon as the rate is reached. This requires that you have funds in your account and it can be convenient for certain payments to ensure the currency is there when you need it. Tracking a rate gives you a bit more flexibility, but it also requires that you take action to either exchange currency online or over the phone once you’re aware that your target rate has been reached.
A currency specialist can help with guidance and a range of tools
We offer all our clients a professional service that helps you transfer money across borders. As well as market and limit orders and a rate tracking service, we can provide guidance on the activity in the market. We also can make a range of tools available and offer ways to manage your money overseas including an online account and automated regular payments. All this and you’ll enjoy great rates and lower fees than most high street banks.