Businesses who trade internationally or are expanding overseas can be significantly affected by fluctuations in the currency market. In this article, our currency partner TorFX, a multi-award-winning provider of international payment services, outlines various currency transfer options designed to help businesses maximise their returns on international payments.
In today's global economy, managing currency exchange efficiently is vital for businesses involved in international transactions. Exchange rates are constantly fluctuating, and even small movements can significantly impact the value of business payments, especially when large sums are involved.
To illustrate, let’s see how much difference a seemingly small variation in the exchange rate can have on a $55,000 AUD/NZD currency transfer…
In February 2024, AUD/NZD was trading at $1.05, making $55,000 worth NZ$57,750.
By May 2024, AUD/NZD was trading at $1.10, making $55,000 worth NZ$60,500.
That’s a substantial difference of NZ$2750 in just three months.
Such fluctuations highlight the importance of understanding the currency market and the tools available to optimise international business payments. TorFX offers a range of currency transfer solutions to meet various business needs. Here’s a quick overview of the most popular options:
For immediate currency transfers, a spot contract is ideal.
This service offers a competitive exchange rate based on the live rate available at the time. Spot contracts ensure a swift turnaround, typically within 24-48 hours for standard currencies, and slightly longer for ‘exotic’ ones. If funds are available on account, the transfer can even occur on the same day. Spot contracts are perfect for urgent business payments, covering operational costs, supplier payments, and other immediate financial needs. They can be conveniently booked online or over the phone with a dedicated Account Manager.
Forward contracts provide stability amidst fluctuating exchange rates by allowing you to fix the current exchange rate for future use.
By paying a deposit to secure the rate, businesses can know exactly how much their currency will be worth when the full amount is transferred, protecting against unfavourable market movements. This is particularly useful for budgeting and financial planning for future expenses like covering import/export costs, paying & receiving funds for goods and services or transferring overseas wages or pensions.
Limit orders allow businesses to take advantage of favourable exchange rates by setting a target rate higher than the current market level.
If the target rate is reached, the transfer is triggered automatically, ensuring you capitalise on the best rates without constant monitoring.
Rate alerts also enable businesses to receive timely notifications when their desired rate is achieved, providing flexibility to act as needed. This is especially beneficial for businesses looking to optimise cash flow and maximise returns on international payments.
Digital currency wallets allow businesses to purchase and securely store currency when the exchange rate is favourable, providing the flexibility to move money between wallets and send payments with ease. This feature is particularly advantageous for managing future expenses and mitigating risks associated with currency fluctuations.
Keeping up with the latest currency movements can be time-consuming, but TorFX's currency experts provide valuable insights and updates to help businesses make informed decisions. By signing up for daily currency updates, businesses can stay abreast of market trends and determine the best times for making international payments.
Leveraging TorFX’s comprehensive array of currency transfer solutions enables businesses to navigate international payments efficiently, ensuring better returns and optimised financial management.
By utilising these tailored services, businesses can manage their international transactions with confidence and ease, securing better outcomes for their financial operations.
* Any opinions expressed in this document are those of TorFX analysts. Any analysis and/or forecasts provided are aimed at helping business’ understand market conditions and developing trends. You are responsible for their own trading decisions.
TorFX Pty Ltd, Suite 202, 25 Elkhorn Avenue, Surfers Paradise, Queensland 4217, Australia. AFS Licence number 246838. TorFX Pty Limited under the Anti-Money Laundering and Counter Terrorism Financing Act 2006 is regulated by the Australian Transaction Reports and Analysis Centre ‘AUSTRAC’. TorFX Pty Ltd ABN 27 103 142 829.
