Five Ways to Monitor and Optimize Exchange Rates
Exchange rates are constantly in flux, presenting a challenge for businesses that need to make the most of their funds in international markets. Here’s how you can obtain the best foreign exchange rates and minimize related costs.
Key Takeaways
- Foreign exchange rates measure how much of one currency you can trade for another currency
- There are several ways to obtain an optimal exchange rate
- Key strategies include monitoring markets, making trades at the right time, and finding services that offer the best rates
What Are Exchange Rates?
Exchange rates are a measure of how much of one currency you’ll get in exchange for another currency.
For example, under a EUR/GBP exchange rate of 0.82, you would receive 0.82 British pounds for every euro you trade. Opposite this would be a GBP/EUR exchange rate of 1.22, so you would receive 1.22 euros for every British pound.
You are subject to exchange rates whether you’re intentionally FX trading or just making an international transaction that converts your money in the process.
As such, it’s important to be aware of exchange rates and understand how to make the most of them. Here are a few strategies.
1. Automatically Monitor Rate Changes
Exchange rates change every second. It’s easy to look up exchange rates when you need them — but that won’t help you find the best rate.
Instead, you should use online tools to automatically monitor rate changes.
Sites like XE.com and Google Finance provide rate alerts and other monitoring tools so you’ll always know when exchange rates are optimal.
You’ll be able to choose whether you want to receive notifications by email or other methods, how often you want notifications, and more. Many sites offer free plans, but paid plans might provide more features and capabilities.
Payset provides live rate quotes updated every ten seconds so you’ll always be able to see the updated rate before finalizing a transaction.
2. Trade at the Right Time
If you want to time your trades to take advantage of the best exchange rates, limit orders can help you trade a currency at a desired price or better.
When you set a limit order, your trade will automatically execute as long as someone fills it during the time that it is open. Be aware that orders with unrealistic limits won’t be filled and may result in missed trading opportunities.
For a simpler alternative, you can manually time your trades. Set up exchange rate alerts and execute your trade when you see a desirable exchange rate.
3. Consider Fees and Commissions
You can keep more of your money by paying attention to FX fees.
If you want to receive an exchange rate close to the interbank rate, you’ll generally need to choose an FX exchange with high commission fees.
On the other hand, FX exchanges with low or zero commission fees often provide an exchange rate worse than the interbank rate. You’ll receive less for every currency unit traded, but that cost might be offset by the lower fees.
Keep in mind that there are other costs beyond conversion rates, such as the cost of moving funds on- and off-platform and regular account fees.
Ultimately, there’s no single best pricing model — always compare to find the one that works best for your trade.
4. Use Multi-Currency Accounts
Multi-currency accounts allow you to hold several currencies at once.
This is useful if you work with the same currencies on an ongoing basis: you can purchase large amounts of a currency cheaply long before you plan to use it.
Multi-currency accounts are also useful if you receive a foreign currency that you plan to spend in its original form. That way, you won’t need to exchange funds at all, allowing you to bypass conversion rates and fees entirely.
Keep in mind that you might need to pay other transaction fees and account costs even if you never swap a currency.
5. Have Your Transaction Partner Cover Costs
International transactions don’t always involve currency conversion on your end.
If you send your local currency to another person, the recipient often bears the burden of changing it to their currency and paying conversion fees.
Or, if your transaction partner has purchased your desired currency and sends it to you, they will have already paid conversion fees.
If your transaction partner does take on conversion costs, it doesn’t need to be a loss for them. You can offer a bonus or discount to cover their expenses, which can be more affordable than paying for conversion yourself.
How Payset Can Help
Payset can help you perform instant and affordable foreign exchange (FX) trades involving 38 currency pairs between more than 180 countries.
You’ll also experience benefits like:
- Around-the-clock trading (24/7/365)
- Live rate quotes updated every ten seconds
- Full rate transparency, including the interbank rate and Payset margin, before you trade
- Low fees on every trade
- A wide selection of eligible currencies
Plus, store over 34 currencies with our multi-currency IBAN wallets.
Frequently asked questions
What is a multi-currency account/virtual IBAN?
A Payset multi-currency account allows you to receive money in 34 different currencies and send money in up to 38 currencies, all within the same account.
You can deposit and withdraw funds, convert currencies at competitive exchange rates, and hold your chosen currencies to capitalize on market movements.
A Payset multi-currency account allows startups and business owners to receive payments from clients virtually anywhere in the world and pay suppliers, staff, and contractors quickly and affordably in their chosen currency.
- Funds can be deposited and withdrawn from the account for a small fee.
- Account holders can send and receive money with other Payset users for free.
- Depending on your region, you can use various payment networks from your Payset account, including SWIFT, SEPA, ACH, Fedwire, Faster Payments, BACS, and CHAPS.
- Once you register an account, you will be provided with a Virtual IBAN (International Bank Account Number), which makes all of these transfers easy.
- We provide you with local payments and collections. For example, transactions in USD, EUR, CAD, and GBP are processed through the local payment networks, which is far cheaper and takes minutes as opposed to days
Are there limits on the amount of money I can send and receive?
No, there are no transaction limits on Payset multi-currency accounts.
However, higher-volume transactions may require additional anti-fraud verification. If you plan to make a large transaction, contact us in advance to avoid verification delays.
How is Payset regulated?
Payset is regulated as an authorized Electronic Money Institution by the UK Financial Conduct Authority. Our activities are also regulated by the Payment Services Regulation 2017 and the Electronic Money Regulation 2011 (SI 2011/99).
How do I add money to my account?
How do I send money from my account?
Once you have opened your verified IBAN account and added money to a balance, transferring funds is simple.
Simply log in into your account and add a beneficiary, then simply “make a transfer” in your preferred currency to that beneficiary.
Types of Multi-Currency Accounts
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