Tracking exchange rates is a good idea for anyone who regularly sends money transfers for several reasons. When you convert money from one currency to another, the amount you send or receive is determined by the exchange rate that is offered by the bank or specialist currency exchange provider you are dealing with.
What is an exchange rate?
The exchange rate is the measure of one currency’s value to another, for example, the US dollar (USD) to the Indian rupee (INR). Exchange rates are expressed as ratios, with the original currency first and the currency you are exchanging to listed second. So, for USD to INR, the exchange rate would be expressed as 1: 82.5 which means for each dollar you exchange, you receive 82.5 Indian rupees.
If you are changing Indian rupees into US dollars, then the exchange rate would be expressed as 1: 0.012. This means that for each Indian rupee exchanged, you receive 1.2 US cents. Keep in mind, these numbers change daily as exchange rates fluctuate, so the numbers you see here are an example only.
Why you should track exchange rates
Exchange rates can fluctuate significantly which can bring uncertainty into your finances. Tracking exchange rates, especially if you regularly make cross-border payments, can help you to manage your money more effectively. Here are three reasons why it’s a good idea to track rates:
Get the best value for money
Exchange rates move up and down over time, and if you’re not tracking them, you could end up paying more for your money transfer than you need to. By keeping an eye on exchange rates, you can ensure that you’re getting the best currency conversion deal.
Enable effective budgeting
If you’re sending regular money transfers, it’s important to have a good understanding of how much they will cost. By tracking exchange rates, you can get a better idea of how much your money transfers will cost and budget accordingly. This can help you avoid any surprise costs and ensure that you have the funds available to cover your money transfers. Remember, too, additional fees from the service provider may apply.
Make informed decisions
Exchange rates can be influenced by a range of factors, including economic conditions such as interest and inflation rates and political events such as wars or changes of government. By tracking exchange rates, you can stay up to date on these factors and make informed decisions about when to send your money transfers. This can help you minimize any potential risks, avoid exchange losses, and ensure that you’re making the most of your money.
What are the potential consequences of not tracking exchange rates?
The consequences of not tracking exchange rates can be significant. If you don’t pay attention to exchange rates, you could end up paying much more for your money transfer than you need to, which can eat into your profits, stretch your budget, or impact the amount of money you can afford to send home. If you aren’t aware of the trend in exchange rates, you could also miss out on opportunities to limit costs by sending your transfers at the right time.
How to track foreign currency exchange rates
There are many resources available for finding exchange rate information. You can check the website of your bank or money transfer provider, as they often provide up-to-date exchange rate information. The Western Union currency converter is a simple to use web tool enabling you to monitor how the exchange rate is fluctuating over time.
You could also use other online currency conversion tools, such as Google’s currency converter, or check the exchange rates on financial news websites. Be aware that these sites will give you a good guide as to the current exchange rate but may not be the same as the rate you will be offered by your money transfer provider.
Set up your account and make your first transfer
If you are planning to make regular money transfers, consider setting up an account with Western Union. To open an account, you will need to complete an online form and upload details on your method of payment. The website is a reliable and straightforward way to make your first international money transfer and once you’ve sent one transfer, you can simply use the same details to make recurring payments.
If you are new to making money transfers, we have a wealth of frequently asked questions in our Help Center.
