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How To Know When Currency Exchange Rates are Favorable

April 26, 2013 - by Xchange Of America

Those who are observant enough will notice that the band of currency exchange rate fluctuations can vary widely. For instance, if you buy British pounds, there can be differences between the rates of a purchase made in summer vacation and an exchange made in winter. Such a differential manifests that demand for certain currencies can be higher during the peak tourist season; conversely, the rate can go down post-season. Conceivably, many of those tourists or travelers who have chosen to buy foreign currency on the generous side of their estimated vacation expenditure are unloading their left-over foreign money, resulting in a spike in the supply of that currency and a drop in its market value.

Hence, if you have a substantial amount of some hard or strong foreign currency, it comes as an option to hold on to these funds and wait for the most opportune time to sell or exchange. In this case, what you would want to do is meticulously study what is happening in the financial markets.
This will mean monitoring the daily currency exchange rates.

When the exchange market is volatile, the margin or difference between buying and selling can be significant. At other times, when there is no big news or seasonal occurrence, money trading would be lackluster and the difference between the buying and selling rate can be minuscule, and these trading rates can be unchanged for a length of time.

Major financial institutions have a big advantage in these situations as they have the core competency of tracking the highs and lows of the market, enabling them to anticipate which currencies are best to buy or sell. With the relatively larger volume of trading that they can generate, these entities can achieve gains both for them and their clients even with even just marginal differences between buying and selling.

Taking this bank advantage into account, travelers or tourists who returned still having foreign currency from their trips really can’t profit much from these left-over funds. The banks’ minimum foreign exchange trading lots are usually substantial. For most travelers, it would even be better to just keep the foreign money as a souvenir, if the coins or bills are in mint condition. A wiser alternative is to engage beforehand the services of a travel agency which offers a buy-back mechanism for any foreign currency unexpended during their clients’ trips.