Consider Specifics of the Local Currency When Conducting a Currency Transfer
At present, the United Nations comprises 192 member states which are using 182 currencies that are officially in circulation. Therefore, when arranging a currency transfer you have to bear in mind that many of these currencies are on the list of the so-called “exotic currencies,” which affects their foreign currency exchange rate. There are even more unofficial currencies in the world but you cannot use them to conduct money transfers unless they are in the form of electronic money used to purchase goods online or to pay for specific services (mostly online). We all know that a currency is a medium of exchange and its value is the equivalent of how much of some other currency this particular currency can buy. Therefore, you should carefully consider which currency pair you will be using to arrange your currency transfer. It is impossible for one to know not the name of the local currency in the country where he/she resides, but sometimes one might find it confusing when it comes to currency names in alternative locations. The word “dollar” is used to name the local currency in several major countries like the United States, Canada, Australia and New Zealand, plus several other countries, so it matters what particular currency you are using for a particular money transfer. A person who is living in Australia is accustomed to the purchasing power of the Australian dollar, i.e. what amount of goods one Australian dollar can buy. When relocating to the U.S. or sending money abroad, this person will have to adapt to a different purchasing power of the U.S. dollar, i.e. a different amount of goods the U.S. dollar can buy. Thus, sending AUD 1,000 to a recipient in the United States seems like this amount will be sufficient for one to meet his/her monthly bills. However, due to the currency conversion, the recipient will receive a sum of about USD 950 or less if all applicable fees are calculated. Knowing the exact currency pair is essential and you should better consult your currency transfer specialist before deciding to proceed. The U.S. dollar serves as a de facto world currency but it is gradually replaced by other currencies like the common European currency, the euro, and to some extent the Japanese yen. This means that it will be better to use the U.S. dollar or the euro as the home currency for sending money abroad, but this depends on many factors as well. More important is to be familiar with the home currency of the recipient and its actual value as well as all applicable fees and taxes in the destination country. On the other hand, there are countries which have pegged their national currency to another one. Most of them are pegged to the U.S. dollar or the euro. Such being the case, one does not have to calculate exchange rates and conversion costs because the recipient will receive exactly the same amount of U.S. dollars or euro, minus all applicable fees, in his/her local currency. Currencies exist, however, for various reasons conversions are better to avoid when making a currency transfer. These factors could be political or financial alike and it would be better to ask for an expert advice to avoid undesired effects.