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Send money abroad? How to cushion the dips in the pound amid ‘Brexit’

Paloma Kubiak
Written By:
Paloma Kubiak
Posted:
Updated:
18/04/2016

The pound has already dropped in value by 7% since the start of the year and if Brexit is realised, it could fall by another 15%, a money transfer firm warns. If you regularly send money abroad, here’s how to protect your currency.

Amid uncertainty surrounding the referendum result in June, the value of the pound has decreased since the start of 2016.

Andy Scott, economist at HiFx, said those transferring £500 a month could lose up to £600 a year due to a weaker pound if Britain leaves the EU.

See YourMoney.com’s Currency volatility: why it affects you guide and below HiFX lists ways in which you can protect your money from fluctuations, based on your risk profile:

High risk taker

If you have a flexible budget with no specific timescales and you’re comfortable with more volatile investments such as stocks and shares, HiFX says you could do nothing and simply wait and accept the rates post a ‘Brexit’ vote. But the table below shows exactly how fluctuations will affect you:

HiFx

Medium risk taker

For those who are comfortable with a certain level of risk and have a flexible budget and prefer a diversified approach, you may want to work out your total currency requirement over the next few months, choosing to buy some now and some later.

Low risk taker

If you want to eliminate currency risks, feel uncomfortable with gambling, have a fixed or tight budget and like to set deadlines, HiFX says you could cover your exposure now by checking you have the available funds and your recipient details are easily accessible. This will ensure you’re prepared when you feel it’s right to make a transfer.

HiFX also said that for transactions over £10,000, you can secure your exchange rate to reduce risks with a ‘forward contract’. This means you can buy the currency now and pay the majority of the cost up to two years in the future. Or you could set up a regular payment plan to automate payments and again, fix exchange rates for up to two years ahead.

Scott added: “What’s crucial is that consumers who don’t like to take risks move quickly to protect their Pounds. We’re expecting huge waves in the currency markets as the referendum approaches, so consumers should spend time now familiarising themselves with all available options to protect themselves against potential financial losses.”


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