If you’re sending money to loved ones abroad, a good exchange rate means more money for your friends and family. A bad exchange rate can leave you, and them, out of pocket.
What is an exchange rate?
In simple terms, the exchange rate is how much it costs to buy one currency with another currency. So if you’re sending naira to a friend in Nigeria from your UK bank account, the exchange rate affects how many naira your friend receives.
Why does it matter?
A strong currency can be used to buy larger amounts of a weaker currency. If you’re sending from the United Kingdom then it’s good news if the British pound is strong.
Let’s imagine that you’re sending money to Nigeria from the UK. You want to send £100 to your friend in Lagos, who has a Nigerian naira bank account.
- If the exchange rate is £1 = 175 naira, your friend receives 17,500 naira.
- If the exchange rate is £1 = 200 naira, your friend receives 20,000 naira.
So, what causes the exchange rate to change? How can we tell if the rate is good? Here are some tips on how to get a good deal when sending money abroad using a money transfer company like Azimo:
Follow the news
If you’re paying for your transfer in pounds sterling, you need to be aware of events that might affect the strength of the currency. Political and economic events, such as the Brexit vote of 2016, can have massive impact on exchange rates. It’s a good idea to keep an eye on the news and to check the rate after major news events occur.
It’s also worth following events in your receiving country. The weaker the local currency, the more of it you can buy with your own.
Check the rate
Before you make a transfer, find the real-time rate on a website like Monito.com.
Remember, banks and high street money transfer providers do not give you the real exchange rate when you send money. The exchange rate that they offer is tilted in their favour by as much as 10% – meaning that they take up to 10% of whatever you send.
Online money transfer companies like Azimo are fair and transparent. We charge around 2% because our costs are much lower, and our service is as safe as any bank. We’re regulated by the UK’s Financial Conduct Authority (FCA), the same authorisation that banks need in order to trade.
The best way to stay aware of exchange rate changes is to set up an exchange rate alert. We recommend using Monito’s rate alert service. When the rate reaches the threshold that you specify, such as 500 naira to the pound, you will receive an email and can choose to set up a transfer with a service like Azimo.