We’re regularly asked questions about exchange rates. Here are just a few of the more common ones we’ve seen recently.
Why can’t you tell me the exchange rate in advance?
Forex Group can offer you what are called forward exchange contracts. Through those, we can fix a rate that you can use at some specified time in the future. [ Read More about 'Our Guarantee'.]
What does “movements in my favour” mean?
This phrase is used to indicate whether a relative currency movement may be beneficial or detrimental to you. Let’s say you’re holding Pounds Sterling as a foreign currency and want to convert it to Australian dollars. You may choose when would be the best moment to do that. If Sterling strengthens against the dollar then as it’s doing so, currency movements are ‘in your favour’.
That’s because your funds in Sterling will buy more and more dollars when you do convert them. Of course, the reverse could be true if Sterling weakens – then the movement will be said to be ‘against you’.
What are ‘cable’ and ‘pips’?
You must have been reading some technical forex materials to come across these!
Cable is the historic term used by professional dealers to describe the British Pound / US Dollar exchange rate pairing. It’s really just an old nickname relating to the days when the first trans-Atlantic cable was laid – it’s extremely unlikely that you’ll encounter this term in normal commercial forex service provision. The ‘pip’ is the fourth decimal position of an exchange rate value. So, if a rate quoted is 2.4873 then the last ‘3’ is a pip. This is very important to traders but is less commonly encountered in retail forex services.
Of course, pips can be very significant to market traders seeking to deliver the best exchange rates they can to you. Can I re-negotiate an exchange rate? Once you have instructed a foreign currency exchange provider to buy or sell currency on your behalf, you have struck a deal. Normally, you can’t then change your mind or start to debate exchange rates again. However, sometimes exceptional circumstances arise. It’s always worth talking to your provider to discuss the situation and to consider options.
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