5 Things To Consider Before Exchanging Foreign Currency

Foreign exchange is nothing but exchanging of currency one with another. This situation may arise due to various reasons like traveling abroad, studies, etc. Or, individuals staying abroad transferring money to their family.

According to Foreign Exchange Management Act, 2000, you must surrender the unused foreign exchange within 180 days of your return from abroad.

However, if you so desire you can keep foreign exchange up to USD 2,000 in your Resident Foreign Currency (Domestic) Account. You can keep the amount in foreign currency or traveller' cheque form.

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1) Understand Basics

Individuals who are planning to exchange currency for the first time should be extra careful. First timers should make sure they have basic knowledge about the exchanging currency names and terms.

2) Exchange Costs

Currency dealers usually charge a commission, flat fee, handling fee, or minimum charge for the transaction. Before going to dealers better check the present day currency rates. Compare fees offered by banks, exchange dealers, and online providers.

Check with the forex dealer for any other transactions charges such as wire transfers, or any other transfer fees.

3) Multiple Transactions

Dealers and banks charge the fees per transactions, so if you have planned for multiple transactions, you may end up paying higher transactions fees and charges.

4) Fake currency

Take note of watermarks and other security features which will help you in identifying fake notes. It is always suggested to deal with popular exchanges and dealers.

5) Bank Account

Opening a local bank account will save and help in case of long stay in another country. This will make your transaction easy and secure.

6) Consider exchange risk

Exchange risk is the risk which customer should bear in case the currency drops during the period. One cannot really time the currency market to perfection.

As an example, a person working in Dubai may wait for the rupee to reach higher levels against the Arab Emirates Dhirham before remitting money. It may or may not happen and in fact, it could even follow lower, waiting for longer.

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