Exposure to Foreign Exchange? Are you paying too much for your Foreign exchange transactions?

We all know that foreign exchange costs us money, each transaction small or large has a spread built in, but most do not realise HOW MUCH is it is actually costing!

The financial institutions (not limited to banks alone) are – in a considerable number of cases – charging fees that they build in to the spread of each foreign exchange transaction without their clients being aware how much it is costing them. This in itself is not uncommon; most clients know the banks and exchange bureaus make their money from the spread. However, it is the amount of money that they are making on each transaction which their clients are unaware of.

At the request of a BellAcre Trading client we recently provided assistance reviewing his foreign exchange transactions over the past 6 years.

Below you will find two examples of transactions that we reviewed which lead to a “goodwill gesture” (refund) from the client’s financial institution.

The spread charges totaled around AUD $5,000 from these two transactions alone.

USD $50,000

Bank rate quoted: 0.71512

Date: 30.08.2016

AUD cost: $69,918.33

Actual market rate for the date in question: 

Low: 0.75002

High: 0.75703

AUD cost based on the day’s low: $66,664.88

AUD cost based on the day’s high: $66,047.58

AUD cost based on median value of 0.75351: $66,356.12

More than AUD $3,500 difference

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USD $25,000

Bank rate quoted: 0.71492

Date: 31.08.2016

AUD cost: $34,968.94

Actual market rate for the date in question: 

Low 0.74903

High 0.75476

AUD cost based on the day’s low: $33,376.50

AUD cost based on the day’s high: $33,123.11

AUD cost based on median value of 0.75189: $33,249.54

More than AUD $1,700 difference

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Since commencing the journey that started with a Gentleman from Australia, we have enjoyed twenty eight “successes” in the form of “goodwill gestures” paid directly back to the client from their financial institution.

The latest was received by a potential US client from their bank Wells Fargo. The amount received in the form of a refund was USD $14,890 emanating from 7 foreign exchange transactions over the past 11 months.

This is not limited to transactions with Australian or US banks. We are now reviewing some transactions from a client using a French bank and some British based banks.

If you know of anyone that makes regular foreign exchange transactions – or even one a year given some of the transactions have seen some very high fees – that may benefit from having their transactions reviewed, we will analyse the transactions free of charge, with absolutely no obligation on their part, searching for “stealth” fees that they may be unaware of.

We welcome the opportunity to review any size transaction over USD $10,000 (the minimum that the institutions are likely to consider without arguing it is too small of a transaction to consider pricing).

If you have foreign exchange exposure and would like us to analyse your transactions free of charge with no obligation to use our services, please contact:

• Anthony Cooper / [email protected]
• Dan Welton / [email protected]

TODAY'S EXCHANGE RATE AUD/USD

Look at the market rate above. Now look at NAB.s rate at exactly the same hour today;

That is a very wide spread, generating a lot of profit for the bank!

Indicative rates as at 07:55 PM 27 Apr 2017. Fees not included. NAB’s ability to transact in the above currencies may change from time to time subject to the individual countries exchange control laws and rules. Refresh page for latest rates.