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Posted January 8th, 2015 by Charles Purdy

Why planning is key to currency transfers in 2015

Expats and overseas property buyers should take extra care when making overseas payments in 2015, thanks to a string of political and economic events that could cause volatility in the currency markets.

Anyone on the verge of repatriating or sending funds abroad could be exposed to yo-yoing exchange rates if they are exchanging their money during a period of political or financial uncertainty. Not knowing what exchange rate you will receive when making a currency transfer makes it difficult to budget, particularly when purchasing an overseas property.

Uncertainty in the Eurozone and its effect on exchange rates
Indicative of the year ahead, just a week into January, sterling hit a 17-month low against the dollar, but at the same time rose to a six-year high against the euro.

The next phase of volatility in the currency markets could come towards the end of the month. The European Central Bank (ECB) has a policy meeting on 22nd January, when there is talk of the ECB announcing quantitative easing (QE) in the Eurozone – a move that would de-value the euro further. Compounding this, Greece goes to the polls on 25th January and there are concerns that a victory for the country’s left-wing opposition party could lead to Greece leaving the Eurozone, so-called ‘Grexit’ – again, this would undermine confidence in the single currency.

Of course, if the election results go in favour of Greece remaining in the Eurozone, we could perhaps expect the euro to recover some ground against other currencies, at least momentarily – which could be fuelled further if QE in the Eurozone is delayed for a later date. But nothing is a given in currency markets.

More uncertainty in the UK could spell trouble for sterling
Meanwhile, the weeks leading up to the UK’s general election in May will be a period of uncertainty, which could see the value of sterling wobble. And if the election outcome is not conclusive and leads to another coalition government, which in turn leads to a fall in confidence, sterling could suffer further – as happened in 2010. To counter that, there are expectations that 2015 could be the year interest rates begin to rise in the UK, which would be a boost for sterling based assets as well as the currency itself.

Currencies further afield
Elsewhere, the ongoing drop in oil prices is weakening commodity based currencies around the world, including the Australian dollar and Canadian dollar. Anyone about to emigrate to either of these countries will be watching these two currencies closely.

Find out what this means for you
This brief overview of how upcoming events in 2015 could affect your currency transfers needn’t seem daunting. The team at Smart Currency Exchange constantly monitors currency markets and what affects them, so they are able to offer guidance on the most effective way to transfer money according to your individual needs. For example, one clever way they can help to protect your money from sudden swings in the exchange rate is through forward purchasing currency, using a specialist currency product called a Forward Contract.

To find out how to get the most from your currency transfers and to open a free, no-obligation account with leading currency specialists, request a call back from Smart Currency Exchange or read their free report – A Currency Specialist’s Guide to Overseas Property.

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