Planning a romantic getaway? Your honeymoon, perhaps? Or a skiing holiday for the whole family? Whether you are travelling for business or for pleasure, keeping an eye on foreign currency can help you save money that could go towards something much more memorable and enjoyable.
Staying in the loop with foreign currency exchange rates is essential if you are a regular jet-setter. If you spend three days a week working in your Berlin head-office, or you visit a loved one in who’s based out ion Singapore three times a year, it is even more important to make savings wherever you can.
The Credit Crunch and Currency Exchange
Rates have been affected by the global recession, just like everything else. The UK was thwarted by the credit crunch and there was no help for the plunging pound. So checking foreign exchange rates before you make your travel plans is something that you should think about.
So how is the conversion rate calculated? In percentages, a Canadian dollar might be worth 85% of the American dollar – so this would work out at 85 cents. In currency, you would get 85 cents for every Canadian dollar you hand over. But the ever fluctuating foreign exchange rates could mean that you are getting a pound to 2.5 US dollars one day, and a pound to only 2 US dollars the next.
Ever changing market conditions dictate the variations in foreign exchange rates, so it is always an idea to research the last two weeks of conversions, and maybe even take a look into the history of the conversion.
The Difference between ‘Floating’ and ‘Pegged’
A currency will either be free-floating or pegged. The difference between the two is very simple. In the 1980′s the Hong Kong dollar was pegged relative to the US dollar – this meant that there was a set percentage in conversion. A free floating currency is free to fluctuate with the changing market conditions in relation with other currencies.
Floating currencies can make a huge difference to your expenditure. Being aware of what’s happening with foreign exchange rates is highly beneficial to the traveller and will increase spending power when the variation works in favour of their finances.