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Frequently Asked Questions

Here is a selection of FAQs regarding foreign exchange services for those buying property overseas or making regular payments to a foreign account.

1. What does a foreign exchange specialist do?

The company's dealers buy and sell currency in the international money markets on behalf of corporate and private customers. In addition to more competitive rates, foreign exchange specialist will usually be able to offer a faster, more personal service than that available from the high street banks.

The dealers work on behalf of their customers to make sure that the transfer of their funds is as quick and painless as possible. Multilingual staff are on hand to liaise with the recipient of the funds (if necessary) to ensure that the whole process is completed smoothly.

2. How much do foreign exchange specialists charge for their services?

Unlike many bureaux de change, foreign exchange specialists do not normally charge commission on foreign exchange transactions. The rate that you agree with the dealer is the rate that you will pay.

3. How do foreign exchange specialists make their money?

By buying large volumes of currency directly from the money markets, they are able to secure rates that are not available to the general public. They make a small margin between the rate at which they buy from the market and the rate that they sell to their customers.

4. How can a foreign exchange specialist save me money?

Foreign exchange specialists simply don't have the large overheads of the major banks and we are able to pass these savings on to our customers by providing better value for money on foreign exchange services. For example, independent research has shown that the lowest rates offered by ME Exchange "were 1.27% better than the lowest rates at the high street banks".

5. For how long can you usually fix a rate?

It is possible to book a rate on a forward contract for up to two years in advance, though in practice, forward rates for more than 12 months ahead on currencies like the US dollar and the euro tend not to be very cost effective.

Forward rates are calculated using the spot rate in force at the time of booking the rate and the interest rate differential between the currencies involved. The further into the future that the rate is booked, the greater the impact that the interest rate differential has on the rate. Since interest rates are currently lower in the US and euro zone than those in the UK, someone with sterling booking a forward rate to buy US dollars or euro would see the forward rate worsen the further into the future that the maturity date of the contract was to be set.

The reverse would be true in the case of booking a rate for a currency where the interest rate was higher than in the UK, such as the Australian dollar.

For a spot transaction, the rate is fixed at the time of the call to the dealer. Settlement is due within 48 hours from the time that the contract made. The rate agreed is not affected by any subsequent changes in exchange rates.

6. How do I protect myself against exchange rate fluctuations when paying a mortgage overseas?

ME Exchange's Regular Payment Service allows monthly amounts such as mortgage payments to be made to foreign banks. It is possible to fix a rate for 12 monthly payments, however the rate that you would get would not be as competitive as one based on the market rate on a month by month basis. Most customers using the Regular Payment Service have found that opting for a rate based on the market rate in force at the time of each monthly payment has proved to be more cost effective than taking a fixed but less competitive rate.

7. What is the smallest and largest amount of sterling I can exchange through a currency dealer?

ME Exchange's minimum amount is usually 5,000 for a one-off transaction, though we do handle smaller amounts for customers who trade frequently and also provide a regular payments service for those sending monthly mortgage and pension payments etc. The minimum monthly amount for this service is 500.

There is no maximum amount.

If you need advice or just require more information,

please feel free to Contact Us.