Understanding indicative exchange rates
Whether traveling to another country or calculating fees attached to monthly remittances, understanding indicative exchange rates is essential.
Exchange rates can be particularly confusing if you received varying quotes on currency values from different sources. That's why it's best to research interbank rates, which are the currency rates banks use when exchanging large sums of money.
These rates indicate the value of one nation's currency as compared to another – for instance, the difference between the value of one U.S. dollar versus the value of one Indian rupee.
As of the time this article was written on November 1, 2010, one American dollar is worth 44.24 rupee, according to Oanda. This means that a single dollar in the U.S. could purchase the same amount of product as 44.24 rupees in India.
Because these rates change on a daily basis, it is important that those who regularly send an international money transfer to loved ones who are living abroad to keep abreast of fluctuating currencies. There are a number of resources that will help you understand current indicative exchange rates.
Many websites, such as XE.com, list the exact exchange rate for most nations. This website is free to use and is an excellent resource for immigrants living abroad.
However, sending money through a bank may lead the money sender to spend more on a remittance, as many companies and banks will charge a large premium on the currency rates.
Additionally, some money wiring companies will indicate a specific rate on their homepage, but will then hold the money for three to five days in hopes that exchange rates will change for their benefit. These companies often do not deliver the exact amount they initially indicate.
Fortunately, there are some private money transfer companies that promise a "locked-in" exchange rate that will not change, even if currency values fluctuate while the money is in transit.
If you send an online money transfer to family members or loved ones in your home nation, then you may find that some of the most secure online money transfer companies list exact exchange rates, in addition to sending fees, directly on their website.
Monitoring exchange rates and investigating private money transfer policies will ensure that you get the best deal when sending money abroad.