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Posted June 9th, 2010 by Charles Purdy

An Option the Banks Won’t Tell you About….

by Smart Currency’s Charles Purdy.

It is often thought that the only way to buy currency is by paying for it in full.

Most buyers that don’t know about currency options buy the currency as and when it is required – they wait until the last minute. This is what the banks love their clients to do as the client is ‘forced’ to buy at the rate the bank offers.

Some buyers buy the €’s immediately when they know the amount even if they don’t need to use them for 3 months. Buyers do this to avoid the cost of the euros increasing so they know their exact costs.

However there is a more efficient alternative that the banks fail to tell you about.

The alternative is to secure your currency requirements (without paying the full amount for them) using what is known as a forward contract.

Pretend that you require €100,000 in three months time and you don’t want to risk the sterling cost increasing by £5-10,000. (An increase can easily happen due to changes in the exchange rate between now and 3 months time)

You can agree an exchange rate for those €’s now. All that would be required is a deposit of up to 10% of the sterling purchase cost.

This means that you don’t need to pay the full amount for the euros now, so you can keep 90% of your funds in a sterling high interest account. By doing this you will know EXACTLY how much you will require when it comes to pay for the €’s in three months time. (You’ll know that you won’t need to pay an extra £5-10,000 )

It may sound complicated but is very simple to do when you work with a company like Smart Currency Exchange. And the joy of such an approach is that it removes all the uncertainty and the associated stress and strain as you know exactly what your cost will be.

For more information on Smart Currency Exchange, please call our freephone: 0808 163 0102 (+44 (0)207 898 0541 from outside the UK) or visit our website at: SmartCurrencyExchange.com

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