The only way to ensure that you do not have exchange rate issues is to ensure that your income and expenditure are in the same currency. This will be the case if you are earning and living in the same country or if you move within a currency zone, such as the Euro Zone. For most expats exchange rate risk is something that they need to consider:
- When moving to your new home you may want or need to take some of your funds with you and will need to get the best possible exchange rate.
- If you continue to have expenses, such as the running costs for your house retained in your home country you will have a long term issue to address.
- If you are purchasing a home in the new country partially financed with funds from your home country you will be exposed to exchange rate risk, which could fundamentally change the attractiveness or even viability of the purchase if there is a major shift in exchange rates before the deal is finalized.
Where you have such costs subject to exchange rate risk you should ensure that you have cover. This can be achieved by making sure you leave some funds at home to cover these costs or by arranging for a deal with your employer that either splits your salary between the two currencies or fixes the exchange rate (which, of course, creates its own risk).
For larger transactions and where this is not viable, you should take advice from your bank or from specialist foreign exchange firms to hedge the risk (that is to take out a deal that protects you against movements in the exchange rate). Foreign exchange specialists can provide real advantages over banks as they provide a wide range of services and often have better rates due to the volume of transactions that they undertake.
World of Expats has agreed a deal with Smart Currency to give you access to bank beating exchange rates, free advice and many tools and services to help you to understand and manage your exchange rate risk.