Do you plan to emigrate to France, or perhaps buy a property there? Then, one of the things you’ll have to do, alongside finding a job, locating a school for the kids, and a whole host of other practical issues, is transfer money to France. This is because, if you’re emigrating to France, at the very least you’ll probably need money in a local bank account to. And if you’re paying for a mortgage in France, the money will have to come out of a local bank account.
Given that, how do you transfer money to France? This may seem especially perplexing if, for instance, you’ve never done anything more complicated than exchange currencies at the post office for a holiday, and aren’t really sure how the foreign exchange rates work. Here’s a brief introduction to foreign exchange plus how best to go about transferring money to your French bank account.
How to read the foreign exchange rates
If you’ve ever exchanged currencies, either at a bureau de change, the post office, or even Marks & Spencer, you’ve probably seen a foreign exchange table that looks a bit like this:
What does it mean? Well, in plain terms, it tells you how much you’ll get selling 1 unit of a currency to buy another currency. So, if we wanted to spell out the first line of the table as fully as we could, we would write: ‘If you were to sell one UK pound, right now you would buy 1.2386 euros in exchange.’ And for the second line: ‘If you were to sell one UK pound, right now you would buy 1.5968 US dollars in exchange,’ and so on.
In this way, the next time you look at a foreign exchange table, you’ll be able to tell exactly how much each currency is worth versus the others.
How the foreign exchange rates work
As you probably know, foreign exchange rates aren’t stable. How much you get for exchanging one UK pound into euros changes, not just day by day, but second by second. This is because the foreign exchange market is a live market, with countless participants across the world, deciding how much they’re willing to buy and sell each currency for.
What determines how much each currency is worth? Well, in general, the economic and political health of the country it belongs to. So for instance, if the Eurozone enters recession, that sends a negative signal about the state of Europe’s economy. That in turn sends the euro down, making it cheaper (in other words, a recession in Europe could help you obtain a higher euro total.) And so, as economic information is released, the rates change as the market digests it.
How best to exchange currencies
You might be wondering, ‘Wonderful, but how can I use this information when I’m buying my euros? How is this useful for when I transfer money to France?’ Well, here’s what to keep in mind when you actually go about choosing a company with which to transfer money, and then making the transfer.
You’re looking for the best rate you can get.
If you intend to sell US dollars for euros for instance, and the rate is 0.75 one day, but then moves to 0.80 the next day, you’ll get more euros on the second day than on the first. Generally speaking, whatever currencies you plan to exchange, it’s better for you if the value you buy at is higher. This will give you a higher overall total.
Compare the exchange rates you’re offered.
When you’re choosing which company with which to exchange currencies, one of the determining factors should be the exchange rate they offer. This is because, though the ‘market’ rate is what it is, the rate you get from a company will differ, depending on how much money they try to make for themselves from the transfer. Banks for instance are well known for offering less favourable (to customers that is) exchange rates than currency brokers, making comparing the rates well worthwhile.
Check the company’s security credentials
Last but not least, it’s vital to check a company’s security credentials before you transfer money with them. In the UK, this means making sure they’re directly authorised by the Financial Services Authority to transfer money abroad, while the US equivalent is Securities and Exchange Commission. What this means is, if the company is authorised, they adhere to all legal and regulatory requirements, including keeping client funds in designated client accounts.