Even if your heart is settled on a dream property overseas, currency fluctuations can cost you more than you think. Don’t let it happen.
By Tom Wight – HIFX, August 2006
Working with international property specialists worldwide, HIFX realizes that many of their American clients may need to perform one or more currency transactions in order to facilitate a purchase abroad. Some people would simply contact their bank to exchange and transfer their US Dollars for Canadian Dollars (CAD). However, there are huge potential savings to be had by speaking to a 'specialist currency broker' like HIFX.
HIFX’s focus is to educate clients on the currency market, secure a better exchange rate than the banks, and transfer funds free of charge. The service is designed to make the currency aspect of an international property purchase as simple, secure, and cost effective as possible.
Volatility in the currency market is an undeniable daily occurrence. With a daily turnover in excess of $1.9 trillion and innumerable economic catalysts that cause the market to move, it is impossible to forecast currencies with 100% accuracy. While large corporations employ market professionals to manage billions of dollars worth of currency risk, private individuals purchasing property abroad are often left at the whim of this massive market - uneducated and at risk. More importantly, many investors don’t realize how quickly the currency market can move or how these movements directly affect the cost of their property overseas.
A Canadian property priced at CAD$500,000 would have cost USD$377,472.44 in early September 2004. Due to a weakening of the USD and a fluctuating exchange rate, by November 2004 that same property would have increased in cost to USD$426,803.24. The difference in cost works out to be USD$49,330.80, or an 11.56% increase in cost in less than 3 months. This is a classic example of avoidable currency risk. If the CAD had been reserved in September through booking a forward contract with HIFX, the exchange rate would have been fixed and thus the $49,803.24 additional cost would have been eliminated.
Whether you are buying property overseas, relocating, or simply need to make regular payments abroad, it is worth learning more about how you can take advantage of the corporate rates of exchange and corporate services offered by HIFX's Private Client Services Group. The exciting news is that this HIFX service is FREE for Cathy Travis’ clients!
HIFX will walk you through several different strategies that you can implement in order to protect against currency risk including locking in today's exchange rate for up to 24 months. There IS an alternative to using your bank.
Cathy Travis is a gold award winning REALTOR®, who offers a unique service in the real estate world today, thinking globally and providing service with integrity and excellence.