Buy Dollars using a Forward Currency Contract
How to Buy US Dollars with a Forward Currency Contract.
If you have a need to fix a USD, dollar, currency exchange rate today, for a payment date at some future point, then you are likely to need a Forward Currency Contract.
- You may have agreed to buy a property for sale in Florida today, but the completion of the legal paperwork may be set for 2 month’s time
- You may be in business, and need to fix the price of ordered imports at today’s exchange rate. Especially, if you anticipate that the exchange rate may not be as much in your favour when you need to pay for the goods.
- You may work abroad and have a need to regularly transfer a sum of money, but you believe that the exchange rate is at it’s best today
As long as you believe that the exchange rate is good , and you have 10% of the full amount you want to buy, then a Forward Currency Contract could be the choice for you.
Here’s an example:
- You agree to buy a property in Florida for 200,000 Dollars, usd, and you have your money currently in Pounds Sterling.
- You are planning to have a 100,000 dollar mortgage, so you need to buy 100,000 dollars with pounds.
- The exchange rate is at the best rate for selling pounds to buy dollars for a while.
- In this example, the GBP:USD exchange rate is 1.68 to 1, then the property is costing you £119,047.
If the exchange rate changes to 1.54 by the time that you need to change the money, then the price of the property effectively goes up by £10,823 to £129,870.
As you will be changing half of that amount, you will need to find an extra £5411 on the completion date.
To avoid this, all you have to do is:
- Agree to buy $100,000 today, at a rate of 1.68, but send your currency dealer just 10% as a deposit.
- Pay the balance on the day that the contract ends, which can be set for over a year’s time.
The downside? Well, of course, the exchange rate may go the other way. But, you will at least have the comfort of knowing that the price of your property purchase is fixed.
FAQ: Can I have the money earlier than planned?
Yes, because your currency can create the currency exchange as a “Time Option Forward Currency Contract”. Provided you send the money to the currency broker, they will change it and send it to wherever you ask at any date before the final day of the contract.
To discuss how your currency dealer can help you with a Forward Currency Contract, please speak to Zoe on 0044 (0)1480 458400. www.fx-foreignexchange.com
Buy, Sell, US Dollars at the Best Exchange Rates
How to get the best currency exchange rates for your US Dollars, USD.
There are many ways to buy and sell US Dollars, but our currency brokers will buy and sell USD for you at the very best exchange rates available.
When buying, or selling, a property in Florida, many customers ignore the currency exchange rate right until the moment that they need to make a money transfer. This is usually a very costly mistake. By this time, you won’t have any option but to buy your dollars at whatever rate your bank gives you. When buying a property, the amounts are significant. By using a good currency broker, you will beat the bank’s rate and save on the 0% commission offered by the broker.
If you choose to use your bank, it’s likely that they will not necessarily:
- Grant you the best rate of exchange available at that moment
- They are likely to charge you a commission
- They will almost definitely charge a fee for making the money transfer to Florida
If you knew about a way to save on each of the 3 areas, it’s likely you would use it, especially, as the foreign exchange specialists are usually faster than the high street banks as it’s all they do!
Our foreign exchange specialists, fx-foreignexchange.com are now the more likely route for a second property buyer, or expat, for larger currency transfers to Florida.
The advantages of using FX-Foreignexchange to exchange currency to Dollars are:
- The service is safe and swift.
- They generally offer a better rate of exchange (Saving thousands on larger transactions).
- They don’t charge a commission.
- They don’t charge a fee to transfer the money.
- You can also set a rate of exchange that you are prepared to deal at, and FX-Foreignexchange will contact you when the currencies meet that figure so you can buy at the best rate of exchange.
The disadvantage, when compared to a high street bank, is difficult to see as there doesn’t appear to be one!
Open a Free Currency Exchange account with us to make your Bank-to-Bank transfers much better value.
If you are looking to exchange your currency into US Dollars, call FX-Foreignexchange on +44 (0)1480 458400 for a quote, or simply ask for an explanation on how to save money when transferring abroad.
