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Volatile NZ Dollar And DIY Approach Costing Heaps
Volatile NZ dollar and 'DIY' approach to foreign exchange costing Kiwis millions
An unpredictable New Zealand dollar and an overwhelming lack of professional advice could be costing Kiwis millions of dollars in misguided foreign exchange transactions, according to new research released by HiFX.
The Colmar Brunton research* into the foreign exchange behaviour of New Zealanders shows a staggering 94 per cent of Kiwis did not seek professional advice, even when conducting their largest foreign exchange transaction, over the past two years.
Instead, the majority of Kiwis chose a risky 'do it yourself' approach, using exchange rate boards, newspapers, TV or the Internet to obtain foreign exchange information. More worrying still, 13 per cent of Kiwis who made a foreign exchange transaction over the past two years didn't seek information at all.
This research makes for disturbing reading as it signals many Kiwis are letting their hard earned cash slip away with little regard for the risks, says HiFX foreign exchange specialist Paul Janssen.
"Exchanging currency can be a minefield for many if the associated foreign exchange risk is ignored. The timing of the foreign exchange transaction and the strategy applied is critical to obtaining the desired outcome. It is frightening to see so many Kiwis are willing to risk thousands of dollars by failing to get sound, independent advice," says Mr Janssen.
Eighty-seven per cent of those surveyed said they would most likely use a bank to conduct a large foreign exchange transaction with only five per cent saying they would use a specialist foreign exchange company.
"Put simply, whilst your bank will be able to give you a rate they are unlikely to take the time to provide you with a currency exchange service to assist in managing your exposure and mitigate potential risk," adds Mr Janssen.
Those survey respondents who stated they would use a specialist foreign exchange company were significantly more likely to be higher income earners than those that wouldn't, with total household incomes in excess of $100,000.
When asked what tools or services would make foreign currency transactions easier half of those surveyed said securing an exchange rate when it is favourable, even if they don't have all of their money available at the time.
This can be achieved by using a forward contract, just one of the services foreign exchange specialists, such as HiFX can provide to minimise the risks associated with foreign exchange transactions.
Within just one month, between July 2007 and August 2007 the exchange rate for NZD/USD traded between approximately .8100 and .6600.
"Take the example of a family moving to the United States, requiring $50,000 USD to contribute toward their relocation costs. If they had locked in a rate when the NZD was trading at .8100 this would have cost them approximately $NZD 61,728. Less than one month later this cost would have jumped to $NZD 75,757 a difference of $NZD 14,029," says Mr Janssen.
"With further education we hope New Zealanders will realise there are significant savings to be made by seeking professional advice before making their next foreign exchange transaction," adds Mr Janssen.
ENDS
HiFX
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HiFX is one of the largest foreign exchange and international payment specialists in the world, managing over $30 billion on behalf of over 100,000 clients worldwide every year.
Large enough to undertake the biggest transactions, yet small enough to care about each and every one – send and receive overseas payments and manage your account anytime, anywhere. HiFX gives you the flexibility you need to transfer money quickly and easily via a secure online platform 24 hours a day, seven days a week - making moving money as easy as 1,2,3.
HiFX Ltd ABN 54 106 779 953/ AFSL No 240914
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