Arthur
Honorary Master
In these, er, volatile times, it's worth learning at least the very basics about exchange rates, at least as they apply to the proverbial Man In The Street (on the 79 bus).
If you are contemplating anything other than trivial transactions (whatever trivial is to you), I would avoid the generic forex sites people often consult (such as those mentioned above. They can only be an indication, and in volatile times or when large sums are potentially involved (or when quoting people for imported goods), make sure you get the right current rate!
What follows is the quickest and most potted of Forex Primers for TMITS.
There are four basic things to bear in mind:
1. Use the rates published by the bank through which you will transact; generally this is your commercial bank.
2. There is often quite a big price difference between selling a currency and buying a currency. Learn the difference.
3. The actual rate charged on a transaction is generally that obtaining at the time your transaction is 'booked'.
4. Banks charge commissions and other fees to perform forex transactions. These can be steep.
RATES QUOTED BY COMMERCIAL BANKS - Check your bank's website for published rates. These are often updated every 10-20 minutes.
ABSA
FNB
Standard Bank
Nedbank - requires account log-in
Investec Private Bank - requires account log-in
BUY RATE AND SELL RATE
Let's take the current rate quoted by FNB (I don't bank with them or use them):
For the US Dollars line:
a) Bank Selling Rate = R9.4532. If you are selling Rand and buying USD then this is the rate your bank will charge (for transactions up to R50K - if more then you should ask for a better rate, ie less Rand to buy a dollar).
In other words, it will take R9.4532 to buy one US dollar. This is at least the rate your card will be charged if you buy something in dollars (excl commissions and other charges).
b) Bank buying TT = R9.1575. If someone wires you dollars from overseas (or you electronically send yourself money from an overseas dollar bank account) and want to exchange them to Rand, the bank will give you R9.1575 for every dollar sent (excl commissions and other charges).
c) Bank Buying TCs = R9.1015. If you have Travellers' Cheques in dollars, the bank will give you R9.1015 for every dollar you exchange into Rand (excl commissions and other charges).
d) Bank buying notes = R9.1482. If you walk in to your bank with a dollar note and want to exhange it for Rand, FNB will give you R9.1482 (excl other charges).
Because I am amost always converting Rand into dollars (buying stuff on the web, paying foreign suppliers in dollars, etc), I use the Rand Sell Rate. People who quote the Rand Buy Rate (such as the media) are looking at this from an exporter's perspective ... but the Man In The Street is mostly an importer.
(PS. I made this really simple so as to be accessible to non-finance people. I am well aware of the myriad complexities from a trader's vewipoint.)
If you are contemplating anything other than trivial transactions (whatever trivial is to you), I would avoid the generic forex sites people often consult (such as those mentioned above. They can only be an indication, and in volatile times or when large sums are potentially involved (or when quoting people for imported goods), make sure you get the right current rate!
What follows is the quickest and most potted of Forex Primers for TMITS.
There are four basic things to bear in mind:
1. Use the rates published by the bank through which you will transact; generally this is your commercial bank.
2. There is often quite a big price difference between selling a currency and buying a currency. Learn the difference.
3. The actual rate charged on a transaction is generally that obtaining at the time your transaction is 'booked'.
4. Banks charge commissions and other fees to perform forex transactions. These can be steep.
RATES QUOTED BY COMMERCIAL BANKS - Check your bank's website for published rates. These are often updated every 10-20 minutes.
ABSA
FNB
Standard Bank
Nedbank - requires account log-in
Investec Private Bank - requires account log-in
BUY RATE AND SELL RATE
Let's take the current rate quoted by FNB (I don't bank with them or use them):
For the US Dollars line:
a) Bank Selling Rate = R9.4532. If you are selling Rand and buying USD then this is the rate your bank will charge (for transactions up to R50K - if more then you should ask for a better rate, ie less Rand to buy a dollar).
In other words, it will take R9.4532 to buy one US dollar. This is at least the rate your card will be charged if you buy something in dollars (excl commissions and other charges).
b) Bank buying TT = R9.1575. If someone wires you dollars from overseas (or you electronically send yourself money from an overseas dollar bank account) and want to exchange them to Rand, the bank will give you R9.1575 for every dollar sent (excl commissions and other charges).
c) Bank Buying TCs = R9.1015. If you have Travellers' Cheques in dollars, the bank will give you R9.1015 for every dollar you exchange into Rand (excl commissions and other charges).
d) Bank buying notes = R9.1482. If you walk in to your bank with a dollar note and want to exhange it for Rand, FNB will give you R9.1482 (excl other charges).
Because I am amost always converting Rand into dollars (buying stuff on the web, paying foreign suppliers in dollars, etc), I use the Rand Sell Rate. People who quote the Rand Buy Rate (such as the media) are looking at this from an exporter's perspective ... but the Man In The Street is mostly an importer.
(PS. I made this really simple so as to be accessible to non-finance people. I am well aware of the myriad complexities from a trader's vewipoint.)
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