subject: International Money Transfers From Uk [print this page] Money is transferred to another place, for personal and business reasons. The process is quite easy when the transfer is within the same country. However, when money crosses international borders, two dimensions, namely, the exchange rate and security arise. Let us consider an example. When sending money from UK, funds are arranged in the form of British Pounds. When the funds are delivered to the recipient, the amount is paid after converting into the local currency. The exchange rate, that is the number of units of the local currency to be paid for the British Pound is determined by the Bank of England and the central bank of the destination country.
Money Transfer
The actual transfer of money may take place after a lapse of time, running into months, particularly, in business transactions. In the meanwhile, the exchange rate would certainly have changed leading to either a profit or loss. Money transfer mechanisms protect or hedge against possible losses. Suppose, a businessperson is buying a product for 1200 units of currency of some other country and the cost on that day is 1000. If the foreign currency depreciates against the British pound by 10%, the British businessperson will have to pay 1320 units, which is about 1100. Because of these nuances, money transfer is a specialist subject even for banking professionals.
Money Transfers
In the example, under discussion, the British business can "buy" the foreign currency at a fixed rate and can pay only 1000, irrespective of the exchange rate ruling on the day of the actual payment. Further, there is the angle of safety involved in money transfers across the borders.
International Money Transfer
In international money transfer, there should be a tie-up with reliable bank or some other organization in the foreign country, to receive the funds and pass on to the bonafide recipient. The mediating organization may be tasked with the responsibility of holding the funds until some particular action, is performed. Obviously, there will be fees or charges for these services. By intelligent comparison, it is possible to get most economical rates for such fee or charges.
by: Devid Anderson
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