Foreign Exchange - Can You Profit From The Eurozone Crisis?

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The euro is at its weakest level against the pound since the end of 2008, so can Brits profit where foreign exchange, travel money, overseas mortgages and investments are concerned?

Which Way to Pay - Get the Best Foreign Exchange Rates

As European ministers struggle to control mounting fears over the euro, British borrowers, tourists and investors are rushing to cash in. The Greek debt crisis is likely to be followed closely by similar situations in Spain, Portugal and Italy - a 'double-dip' could be inevitable for the eurozone.

Only last week, data showed that the German economy, Europe's largest, saw no growth in the fourth quarter while Italy's fourth quarter growth fell by 0.2% from the third quarter. A bailout plan is in the pipeline for Greece, yet the euro continues to be viewed with caution by both private and corporate investors. Even once a bailout plan is secured for Greece, many investors predict that the pound will stay strong against the euro after the UK general elections in May.

So, how are Britons making the most of the situation? For one, holidaymakers are acting now for great rates this summer - according to whichwaytopay.com the online comparison service, FairFX online currency exchange service can currently offer a very competitive rate at €1.1121, with ICE Travel Money not far behind at €1.150. By buying now, people who plan to travel to the eurozone in the summer can guarantee a good rate. Another way of doing so is by getting a forward contract, which allows you to fix an exchange rate for up to two years.

This strategy is used largely by overseas property investors, and applications for euro mortgages have gone up sharply as the euro has tumbled. People who avoided buying property in prime areas such as Spain, France, Portugal and Italy in the early part of 2009 are now hurrying back to the market to enjoy profit and reduce the sterling value of the debt. This January alone, there were 70% more applications for euro mortgages according to International Private Finance (IPF), the bespoke overseas mortgage service.

Borrowers can choose from a range of hedging strategies such as forward contracts, which give the borrower a 'worst case' rate - if it then moves in their favour, they can take the benefit. Many overseas mortgage brokers encourage borrowers to fix rates so that they may guard themselves against an unforeseen change in the foreign exchange market. Investment managers are also gaining from the euro's weakness by buying shares in European companies, particularly the exporters. Some are even buying Greek bonds.

Getting the most out of the foreign exchange rate is also highly important if you want to transfer money abroad. Using a regular bank or bureau de change can mean a chunk of the money is removed for commission or other fees - so even when the euro is at a beneficial level, the overall saving could be lost. For that reason, it is extremely wise to use a specialist foreign exchange service for making transfers.

For amounts of around £5,000 (or local equivalent) and above an expert broker service can arrange the transfer quickly and with no fees or commission. The foreign exchange rates they offer are also proven to be the cheapest on the market. Currently, World First is offering a margin of 0.7% for private and corporate clients. For transfers of less than £5,000 most brokers will charge a flat fee of around £15 or less. The overall saving made is far more significant than the normal bank can offer and you can select from a range of hedging strategies to make even more out of the transfer.

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Xenia Rainey
Which Way to Pay
(440) 207-3865 x300
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