Sounds familiar!!!! This is the first question all of us ask when we want to exchange money. While all of us know in today’s world almost every commodity has a live exchange where there is constant change in prices, currency exchange market is not an exception but being the largest here the prices change in seconds.
Let us try and answer a few questions which might help you choose the right exchange rate for your transaction.
How often do exchange rates change?
Different currencies are traded against each other freely, which means they are in constant fluctuation. Value of one currency against the other is determined by the flows of the currency in and out of a country. A high demand for a particular currency usually means that the value of that currency will increase. Demand for a currency is created by tourism, international trade, speculations and the perception of safety in terms of geopolitical risks.
So how is that moneychanger/bank giving me a fixed rate???
Now that we know the exchange rates constantly change, the very obvious question that comes to our mind is “if as a customer I am dealing in such a volatile commodity, how can the money changer/bank have a fixed rate mentioned on the electronic board displayed at their counters???”
These institutions are not there to make losses by offering fixed rate to customers when there is live currency rate movement, hence the rates displayed usually have a markup of 3%-5% (sometimes goes as high as 10%) to cover their risk and make margins. This 3% to 10% is the extra amount paid by you just because you are not offered live exchange rates.
E.g. If you are remitting USD 50000/- for your child’s education a 3% markup would mean you paying close to INR 96000 more on that particular transaction.
Best way to save on exchange
All you got to do is check platforms which allow you to transact using live exchange rates like www.remitout.com. These websites are more transparent with their exchange rates and as they offer a live exchange rate.
Nothing comes free but It is very easy to spot the difference in the exchange rates provided on those electronic boards & rates available on Remitout.
So next time you think of making a remittance check www.remitout.com