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Expat currency trading is high risk for the inexperienced
| Published: | 26 Feb at 6 PM |
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With offshore and onshore banks cutting their interest rates seemingly on a weekly basis, many expats and offshore savers are giving up on chasing the best rates.
Tracking currency movements via offshore banks offering accounts in US dollars, sterling and Euros with the option of switching currencies may seem to be the upcoming way to make money from savings. However, experts in currency trading are warning that it’s not for the faint-hearted or the inexperienced.
It sounds simple – for example, if your savings are in Euros at the present time, a move to sterling taking advantage of the weak pound seems logical. However, experts such as Mark Bodega of HiFX warn it’s also a high-risk option.
Speculating on the foreign exchange markets, he says, should carry a government financial health warning applied to all but seasoned market experts. His advice to savers giving it a try is simply – don’t – as unknown factors can turn a gain into a loss in minutes.
Expats in particular should beware, as they will have to cope with high bank charges per change, possibly wiping out any profit or worse. Offshore multi-currency accounts may not have their fees visibly displayed, exchange rates can be poor, and interest rates on a chosen currency may be lower than on the original deposit, again wiping out profits.
For nervous investors it’s a bad time, as almost all the UK banks’ international arms have cut rates to the bone. Lloyds International, for example, is now offering 2 per cent fixed for five years, with others such as Britannia International’s best deal paying a meagre 1.75 per cent.
Tracking currency movements via offshore banks offering accounts in US dollars, sterling and Euros with the option of switching currencies may seem to be the upcoming way to make money from savings. However, experts in currency trading are warning that it’s not for the faint-hearted or the inexperienced.
It sounds simple – for example, if your savings are in Euros at the present time, a move to sterling taking advantage of the weak pound seems logical. However, experts such as Mark Bodega of HiFX warn it’s also a high-risk option.
Speculating on the foreign exchange markets, he says, should carry a government financial health warning applied to all but seasoned market experts. His advice to savers giving it a try is simply – don’t – as unknown factors can turn a gain into a loss in minutes.
Expats in particular should beware, as they will have to cope with high bank charges per change, possibly wiping out any profit or worse. Offshore multi-currency accounts may not have their fees visibly displayed, exchange rates can be poor, and interest rates on a chosen currency may be lower than on the original deposit, again wiping out profits.
For nervous investors it’s a bad time, as almost all the UK banks’ international arms have cut rates to the bone. Lloyds International, for example, is now offering 2 per cent fixed for five years, with others such as Britannia International’s best deal paying a meagre 1.75 per cent.
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