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Remitting Money In Times Of Uncertainty

October 23rd, 2019

Remitting Money in Times of Uncertainty

The foreign exchange landscape operates in a dynamic, ever-changing environment where exchange rate fluctuation is determined by a lot of complex factors. These include economic indicators, social and political stability, business environment and terms of trade, inflation levels, interest rates, and the country’s current account balance, among others.

On an everyday basis, the exchange rate fluctuation in a nation’s currency is minuscule and has barely any impact on the remittance market. However, over the long term, it is an important indicator of a country’s overall economic health.

The global money transfer volume gets directly impacted every time certain events happen. In fact, we often witness currency volatility just on account of speculation. For example, the US dollar saw a temporary slide in July 2019 when markets expected an interest rate cut by the Federal Reserve but bounced back shortly after. On the other hand, some currencies have been experiencing choppy times over an extended period, like the Turkish lira on account of the unstable political and diplomatic scene.

So what does currency volatility mean for consumers? Sometimes, the volatility or ‘run’ on the currency may be favourable, whereas in other instances it may adversely affect your precious capital. The relatively developed first-world countries have much stronger currencies, which explains the large-scale migration of workers to such countries to benefit from better incomes and a positive exchange rate scenario when looking to send money abroad to family.

The global money transfer industry is testament to the migratory flow of remittance. Of the US$689 billion remitted in 2018, a whopping US$529 billion was sent to low and middle income countries by millions of people who emigrated from their home countries seeking better prospects.

For a hard-working expat population, paying remittance charges and dealing with exchange rate fluctuation can be a huge downer, especially when looking to send money abroad for a critical life event such as a wedding, buying a house, educational needs, or a medical emergency.

Large-scale macroeconomic factors are out of our control and will have an impact on the remittance in any case, but there are some tips to keep in mind if you wish to minimise the impact of currency volatility when times are uncertain.

Here’s how to prepare yourself to send money in unpredictable situations:

1. Monitor the exchange rate

If remittances are going to be a regular affair, it makes sense to get a better grasp on the fluctuations in exchange rates between the remitting and home currencies. Stay abreast with the news so that you are aware of any sudden changes. Alternatively, there are various apps you could download on your phone that will keep you updated. You can set alerts for upward and downward trends to understand the general direction in which the currency is moving and how to structure your remittance plan.

For example, most countries publish a monthly or quarterly result on GDP data. Any significant change in this data can have a direct impact on the currency movement. Most business websites and pink papers already have a heads-up on what the monthly data has in store. Using this data to your advantage, you can decide whether to increase or decrease the amount you intend to send home.

Also Read: The Impact of Currency Fluctuations

2. Know how much to send

Unless you are looking to send money abroad for a specific reason, you could adjust your remittance based on currency volatility. If the amount is not too big, the volatility is honestly not going to have much of an impact in absolute number terms. If the volatility is significant and you expect the situation to remain the same in the foreseeable future, it makes more sense to remit a larger amount.

Sending a large amount as against multiple smaller transfers is a lot more cost-effective. You may be able to get better exchange rates on a big transfer as opposed to incurring multiple transfer fees. A good deal on the transfer may help you negate anywhere between 2% to 5% of the currency value against the fluctuation.

3. Use a trusted service provider

In a bid to hunt for a bargain, you must never risk losing your entire capital in a way that it affects the lives of those who depend on you back home. The cheapest option may not always the best; it’s something you need to be wary of, especially in times of political or economic instability. Many fly-by-night operators have been known to take advantage of the demand-supply gap, at times, when immigrants have difficulties with sending money abroad.

You should choose a trusted global money transfer service like Xpress Money, which has been around for 19 years now, has a presence in over 170+ countries and guarantees a completely transparent remittance process.

Xpress Money provides a secure solution for remittances and allows you to monitor the progress right from the time you send the money till the recipient receives it, in a time-bound manner.

4. Be practical during a crisis

In times of urgent need, getting funds across becomes a priority. For example, in case of a near one’s medical emergency, you may want to consider paying a small additional fee to expedite the transfer. This token amount is negligible compared to what’s at stake.

Similarly, in times of social and political unrest, diplomatic relations between countries tend to break down and infrastructure may collapse. In the event that your loved ones are not able to have access to a bank or cannot move far from home due to risk of physical harm, you need a trusted channel that can ensure your family has access to funds for sustenance. Remitting funds during unpredictable times can be tricky, but being prepared and making an informed decision can help you save time and money.