Foreign Exchange Explained

As the world becomes more interconnected, foreign exchange and overseas payments are becoming increasingly prevalent. Whether it’s an individual making a personal payment or a business conducting international trade, understanding how foreign exchange and overseas payments work is crucial.

Foreign exchange is the process of exchanging one currency for another. The exchange rate is the rate at which one currency can be exchanged for another. The exchange rate is determined by the supply and demand for a particular currency, relative to other currencies. This means that the exchange rate changes constantly, influenced by factors such as trade flows, geopolitical events, and economic indicators.

Overseas payments, also known as international or cross-border payments, are transactions that involve the transfer of funds across borders. These payments can be made for a variety of reasons, such as sending money to family members, paying for goods or services or repatriating one-off larger sums.

When making an overseas payment, it’s important to consider the exchange rate, as well as any fees associated with the transaction. Some financial institutions charge a flat fee for international transfers, while others charge a percentage of the total amount being transferred. It’s important to compare different providers to ensure you are getting the best exchange rate and fees.