People who take on projects overseas sometimes move to work in that country for a limited amount of time, this could be a few months or even a few years, depending on the scale of the project. The majority of these people still have commitments in their home country while they are working abroad, such as family to support, mortgage payments or other bills.
Individuals may need to send money back home to make these payments and therefore require a foreign exchange solution.
A disadvantage of using the banks in that they often aren’t the most cost effective solution. Firstly, most banks will charge a transaction fee of around £25, on top of this they will then charge you up to 4% of the total transaction and do this by giving you a less competitive exchange rate.
The main benefit of using a currency specialist is that they charge much less. Currency UK for example offer fee-free transfers with excellent exchange rates on any exchanges over £5000.
Regardless of the method used for foreign exchange another concern for those who are transferring their salary or part of their salary from Saudi Riyals to a foreign currency is that any volatility in the currency market can cause their salary to lose value in the currency they are exchanging it to.
A real life example of that is someone in 2019 from the UK was working in Saudi Arabia and sending part of their salary back home. The individual was earning 180,000 Saudi Riyals per month and sent 60% back to the UK.
For this person the 180,000 Riyals they were sending money back to the UK each month would have seen them receive a different number of Pounds each month. Sometimes the difference was only minor. On the 31st October 2019 the rate was 0.2067 compared to 30th November 2019 where it was 0.2062. This would only see a difference of £90 in the money received when transferring October’s salary compared to November’s, a minimal difference compared to the amount that is being transferred.
However at the start of August 2019, the SARGBP exchange rate was at 0.2218 so if you were to exchange your 180,000 Saudi Riyal salary into Pounds you would have received £39,924. By contrast in December 2019 at its lowest point the rate was at 0.1979 meaning the same 180,000 Saudi Riyals was worth £35,622, over £4000 less.
A £4000 difference in salary due to factors outside of your control is something that all of us would want to avoid if possible. This is something that Currency UK can help you avoid, through the use of a forward contract. With this service we can ensure your salary remains the same each month when transferring it to a different currency, even if the rate moves against you.
A forward contract is ideal for those wishing to take advantage of, and guarantee, a favourable rate for a future date and can also be used to secure the exchange rate for any future bonus payments.
Our team of experts are on hand Monday to Friday to support with any queries or processing payments, alternatively all of this can be done through our online platform which is available 24/7.
Our advice is to have an exchange rate protection plan in place to ensure you can maximise the funds you are transferring to a foreign currency, rather than accepting the exchange rate at the time of each transfer and therefore overpaying.
Posted in Expat Resources on Jun 14 2020