The volatility in exchange rates has continued over the last month, however the Sterling/Euro exchange rate remains in roughly the same place as my last report, around the €1.35/€1.36 mark.
This doesn’t tell the whole story though, because as you can see on the graph below, over the last few weeks we have seen rates as high as €1.39 before dropping back away. In this month’s currency news, I’ll explain what has caused the variations in the exchange rate, and look at ways you can take advantage of short term spikes and also protect yourself against the market moving against you.
What has caused the volatility over the last month?
We had seen rates slowly rise, and by mid-September the Sterling/Euro rate was around the €1.39 mark. This was all to do with the Euro weakening and becoming cheaper to purchase. There were rumours that the European Central Bank (ECB) might cut interest rates, and signal that they were going to extend their stimulus programme.
However, when the ECB president Mario Draghi gave his speech, he actually indicated that there would be no interest rate cuts, and no extension to their Quantitative Easing (QE) programme. This immediately caused the Euro to regain strength, and pulled rates lower.
How can you take advantage of spikes in the market while protecting against rates moving against you?
In addition to helping you achieve better exchange rates than banks can offer, we also offer various types of contract that can help you obtain a rate that might not be currently achievable, and also tools to protect you against sharp drops in the market. Here are the various ways you can do this with the Foremost Currency Group:
Spot Contract Currency Right Now – The most popular way to buy currency. You fix a rate, settle within 2 days, and your currency is transferred by priority transfer to the account of your choice. The rate you achieve is the prevailing rate on the day.
Forward Contract Fix into the Future –You can fix today’s rate of exchange for up to 2 years, protecting you against volatility and helping you to budget. You lodge 10% of the total to be converted within 2 days, with the remaining balance due when you want your currency transferred.
Limit Order Hold out for a better rate – Secure your currency when your desired rate becomes available; particularly useful if time is on your side and you think the rate may get better.
Stop Loss Order Protect against rates dropping – Your currency is exchanged if the rate goes below a pre-determined level. Combined with a limit order, you can hold out for a better rate while protecting yourself from a sudden fall in the market.
Using these types of contract give you control over your currency purchase. The alternative is simply sitting back and hoping the exchange rate will move in your favour. In my experience, hope is not a reliable economic tool. So to discuss our contract types in more detail and take the first step to taking control of your currency needs, contact your expert Currency Broker at Foremost today.
Notes to editors:
Alastair Archbold is an FX manager on the dealing floor, having been with the Foremost Currency Group for over 6 years. With over 16 years’ experience in the Financial Services sector, he has a wealth of knowledge for any clients entering the often daunting world of the currency markets. In addition to providing clients with incredible exchange rates, he has also written countless FX articles for various national newspapers and international publications.
About Foremost Currency Group
“We are committed to shaking up currency exchange by operating in a smarter, leaner and more efficient way, passing the savings onto you and getting you a better rate – every time you trade. Say goodbye to impersonal service and hello to your new dedicated broker. Committed to working on your behalf to get you the very best deal possible.”
Robin McEwen, Managing Director
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