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Strategies to Optimize Foreign Exchange Transactions

Since exchange rates vary unpredictably throughout the course of the year, there’s not one ideal time to transfer money overseas. Still, an unfavorable fluctuation in foreign exchange rates can erode the value of money being sent abroad.

To help guard against potential losses in value, individuals can take the following steps when sending money overseas.

Bundle Transfers with Other Payments

Exchange rates are ever changing, so it’s important to take advantage of opportunities when they arise. When rates are favorable, individuals should consider sending larger sums of money abroad. Individuals can learn about the latest rates by signing up for email market rate alerts from a trusted online foreign exchange service.

The benefits of securing an exchange rate increase the more money someone sends abroad.

“If an exchange rate looks particularly low, try to send the next payment at the same time, if you can,” says Katherine Gragg, an enrolled agent at Greenback Expat Tax Services, a tax advisory for expatriates, headquartered in New York.

Secure Favorable Rates

Online foreign exchange services can offer options such as securing an exchange rate at the time that international payments are made.  

“International transfers can take a few days, and by the time the currency arrives at the receiving firm, the exchange rate could potentially have moved adversely against you,” says Sandi Bragar, CFP, director of planning at Aspiriant, a wealth management firm based in Los Angeles. 

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By securing a rate at the time funds are sent, the sender can rest assured that he or she knows exactly how much money will be received on the other end. And the benefits of securing a rate increases the more money someone sends abroad. “Daily currency fluctuations don’t change too much, but the more you’re sending, the more a fluctuation will affect you,” says Bobby Casey, managing director at Global Wealth Protection, an online asset protection and offshore planning firm registered in Wyoming with partners around the globe. “A 2 percent movement costs more on $50,000 than $2,000,” Casey says. In this case, $50,000 multiplied by 2 percent would equal $1,000; whereas, $2,000 multiplied by 2 percent would equal $40.

To reduce the potential risks of currency fluctuation, individuals can work with a trusted online foreign exchange provider for guidance, insights and helpful resources.

Work with the Same Agent

Once individuals find a service, agent or online platform they are comfortable using for sending money overseas, they should consider staying with the same institution. And individuals shouldn’t be shy about reaching out to the people who manage pricing — especially for online platforms. Individuals who send larger amounts of money will likely have more negotiating power when it comes to lowering transaction exchange rates.

“Lots of financial institutions will work with you on exchange rates and transfer fees when you’re sending regularly with them, as opposed to jumping around from one place to another,” Gragg says.

Discuss Payment Timing with the Receiver

Individuals sending money abroad can also maximize their transactions by working with the person or company who receives the money. This allows the sender to create a window of time in which to secure the best possible rate.

To find out more information on potential fees, regulations, exchange rates and thresholds, it’s important for individuals to work with a financial planner and foreign exchange provider. 

Live Cross Rates

USD 69.1780 1.3128 0.7872 53.3650 1.0000 0.8808
CAD 52.6620 1.0000 0.5993 40.6280 0.7609 0.6706
AUD 50.0830 0.9505 0.5700 38.6390 0.7236 0.6378
EUR 78.4920 1.4897 0.8933 60.5560 1.1342 1.0000
GBP 87.8300 1.6669 1.0000 67.7600 1.2692 1.1185

Example: 1USD = xx INR

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