Foreign Exchange Rate; How it impacts your travel

Foreign Exchange Rate or Forex Rates are an important aspect of the world economy and equally holds its importance in the travel and tourism sector.
It helps determine the economic valuation and health of a country and its people. It is extremely important and critical for businesses, imports and exports, travellers, tourists, immigrants, investors and banks both domestic and international.

How is the Foreign Exchange Rate determined?

The value of every currency is different and this is determined by the economic status of the country. Does it make you wonder as to why foreign currency matters to us? Forex is extremely important for import and export without which we would have limited access to goods and services. When trade happens across countries, it improves prospects and adds considerably to global economic growth. This is exactly why exchange rates play an important role in the economy. As such, it will not be entirely wrong to say that the forces of demand and supply are the ones that fix the currency prices. A related question to this is “How does exchange rates affect tourism?”, to which the answer will be that it impacts the relative costs and perks of travelling to different destinations, hence impacting travel plans.

Who regulates Foreign Exchange Rate?

The Financial Services Authority is the one that regulates the foreign exchange. The Forex market works round the clock and is responsible for the efficient trading that happens between nations. New York, London, Hong Kong and Tokyo are hailed as the main trading centres. In India, all forex trade is done and regulated by the National Stock Exchange and the Bombay Stock Exchange.
In India, trade mainly happens in currency pairs. The Indian Rupee mainly gets paired with the US dollar, Great Britain Pound, Euro and the Japanese Yen. For a common man, understanding the finer points of Forex might come across as a task. As a traveller, they might leave you confused. So, here we are trying to decode the forex mystery in the simplest possible way.
When travelling to a foreign land, it is extremely important that you use the local currency for all transactions. You can get your forex cash through Thomas Cook Forex Services. Here you can buy forex at a locked price. Yes, the forex rates keep fluctuating but getting your foreign exchange in advance will help you save a lot of time and effort when you are on the go.

When do you sell or buy to get the best Foreign Exchange Rate?

Foreign exchange rates are determined by a number of market forces such as:

1. Political Environment
2. Market Forces of Supply and Demand
3. Economic Conditions of the country
4. Overall Socio-Political Conditions of the world

As such, it is difficult to determine the best foreign exchange rates at any given point of time. The only thing one can do is study the historical data, the above conditions and then make an educated, calculated guess in order to buy and sell foreign exchange.

Common Mistakes Travellers Make with Foreign Exchange Rates

Whether it’s your first time exchanging money or you have done it before, there are still ways you can improve and make the process hassle-free. Here are some common mistakes to look out for;

1. Failure to do research and comparison

   Without research and comparison, you may get stuck with poor exchange rates during currency exchange. Which is why one of the key foreign exchange solutions is to research the current exchange rates and compare available options when it comes to providers to shortlist the best deal.

2. Airport & hotel currency exchange
   Travellers often forget to exchange money in advance, so they do it at the airport or at the hotel they are staying at while travelling. This is something you should stay away from under normal circumstances, as the exchange rates and associated fees/charges at these places can be extremely unfavourable.
3. Local unauthorised currency exchange
   When exchanging currency, stick to banks or authorised local or online dealers, ideally in your home country. You should avoid exchanging money from local unauthorised dealers in a foreign country to avoid getting scammed.
4. Overlooking fees and charges
   When exchanging currency, people only look at the exchange rates to make the deal. However, make sure to keep an eye out for the fees and charges associated with the service of exchanging currency. Make sure to go through the entire price breakup before finalising a deal. Thomas Cook provides foreign exchange solutions at competitive rates and with full transparency.
5. Exchanging money in large amounts
   Before exchanging currency, create a rough budget and exchange only a slight amount more than what you think you will need. This is because at the time of exchanging currency back to your local money, you can face a slight loss due to changing exchange rates and added fees. It is better to keep this possible loss to a minimum.

Getting the Best Foreign Exchange Rate before Travelling

The connection of foreign exchange in tourism is a simple one. When you are travelling abroad, you buy forex, which is mainly the local currency at an exchanged rate. The foreign exchange rate holds an important position in the tourism sector. You can use a forex card and cash for transactions while you travel. In case you run out of cash, you can always reload your forex card from anywhere. However, there’s a bit more to foreign exchange in tourism. For instance, post your trip, there are chances that you may still have a foreign currency that you wouldn’t really be required anymore. In a scenario like this, you can sell it. The buy and sell rates vary. Thomas Cook Forex Services can help you buy and sell forex at the best possible rates.
The importance of foreign exchange in tourism is a major one. If the exchange rates keep fluctuating, you might want to wait and check on days when you think you are getting a good value for the forex. Getting in touch with Thomas Cook executives will help you understand the process and procedures better.
The importance of foreign exchange in tourism is also because that’s the only way to transact in a foreign land. Be it paying for a cab fare or just buying a meal. Carrying a lot of forex cash is not recommended and you can opt for forex cards, which are prepaid and can be reloaded anytime. These cards are also convenient, safe and smart. Thomas Cook forex cards make sure you don’t just save money on conversion rates but also a lot of time since the prepaid cards are accepted at most places.

How to Avoid Hidden Fees and Extra Charges in Currency Exchange?

Avoid paying for pesky charges and hidden fees in currency exchange with these practical tips;

1. Compare and research: The very first thing to do is to spend time on comparison and research. With this, you can find proper providers that offer currency exchange services at the best foreign exchange rate with the lowest markups and pick the best deal out of the lot.
2. Exchange accordingly: Make sure to assess your needs and exchange currency at once. Instead of exchanging currency multiple times in small amounts, doing so once in a large amount can help get you the best foreign exchange rate and reduce associated charges/fees.
3. Go with a reputed dealer: The transparent transaction with reputed authorised dealers reduces the worries of paying hidden charges.
4. Be aware of DCC: If you are using your forex travel card for cash withdrawal at an ATM abroad, make sure to pay in local currency to avoid being subjected to a Dynamic Currency Conversion (DCC) fee.

Frequently Asked Questions (FAQs):

What factors should I consider when exchanging currency at the airport?

When exchanging currency at the airport, make sure to look at the price breakup carefully, consider the exchange rates and watch out for associated fees.

Is it better to exchange currency in India or at my travel destination?

It is better to exchange currency in India than at the travel destination abroad due to the best foreign exchange rate and more favourable associated fees.

How do online forex platforms compare to traditional currency exchange outlets?

Online forex platforms have made currency exchange a simple and convenient task. Using this service from a reliable dealer can help you save time and get a better deal in comparison to traditional outlets.