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Guide to Foreign ExchangeMaking the most of your money

R.R.P £4.95

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Important Information: The transfer and custody of client monies by Hargreaves Lansdown(HL) are covered by the transitional provisions of the Financial Services Authority (FSA) as HLis an authorised Payment Institution. The marketing and service of the Currency Service are notregulated by the FSA.

Cont

ents 4 The history of foreign exchange

5 Minor and exotic currencies

6 Forwards

7 Forwards: An example

8 What factors determine exchange rates?

12 How to access the foreign exchange market

14 Foreign exchange for the speculator

16 Buying larger sums of currency and international transfers

19 Top five tips

20 Hargreaves Lansdown Currency Service

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The foreign exchange market is the largestfinancial market in the world. An estimated $3.2 trillion is transacted every day, making itover 10 times larger than the combined valueof daily trading on the world’s stock markets.

The size of the market and significance ofexchange rate movements affects us all. Thiscan be in a number of ways, from the impacton the economy, to the more visible impacton the cost of our travel money.

However, since an increasing number ofpeople have exposure to assets abroad, suchas property or investments, it is important toknow more about the currency market andultimately how to make the most of yourmoney.

The aim of this guide is to provide you withinformation on:

• Why exchange rates move• Economic data releases which affect

exchange rates• Options available to help reduce your

currency risk • Ways to access the foreign exchange

market• How to save money on foreign

exchange

I hope you find this guide informative, but ifyou have any questions please do nothesitate to contact our currency specialistson 0117 311 3257.

Paul DimambroHead of Hargreaves LansdownCurrency Service

Introduction

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In 1944, the Bretton Woods Agreement fixedthe price of gold at US$35 an ounce, andlimited movements in major currencies tojust 1% against the Dollar.

After the Second World War, economiesrecovered and evolved at different speeds.This put fixed exchange rates increasinglyunder pressure until, in August 1971,President Nixon suspended goldconvertibility, leaving market forces free toadjust foreign exchange rates according totheir perceived values. Since then foreignexchange trading has developed into thelargest global financial market.

The market

The foreign exchange market is dominatedby the very big financial institutions, such asBank of New York Mellon, Deutsche Bankand UBS who trade billions of Dollars invalue every day. There are also nationalcentral banks, such as the Bank of Englandand European Central Bank, which enter themarket to buy or sell their own currency(known as ‘open market operations’), withthe intention of either controlling theircurrency’s value, or altering their currencyreserves.

Other participants include brokers (often onbehalf of companies wanting to hedgecommercial positions), hedge funds and to a

lesser but growing extent, private investors.

Major currencies

The most common transactions take place inthe ‘major’ currencies. These are thecurrencies that have the greatest impact onthe global economy. You will often seeexchange rates displayed with the currencyabbreviations as follows:

AUD Australian Dollar CAD Canadian Dollar CHF Swiss Franc EUR Euro GBP Pound Sterling JPY Japanese Yen USD US Dollar

The Euro against the US Dollar is the mostcommonly traded currency pair owing to thesize of the underlying economies and tradelinks.

The history of foreign exchange

FACT: The Sterling/US Dollar exchangerate is also knownas Cable, as it wasfirst transmitted bycable under theAtlantic in 1866.

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Outside of the major currencies, significanttrade exists with the minor and to a lesserextent the more exotic currencies. These arethe symbols for some of the more popular:

AED UAE DirhamCZK Czech KorunaDKK Danish KroneHKD Hong Kong DollarHUF Hungarian ForintINR Indian Rupee MAD Moroccan DirhamNOK Norwegian KroneNZD New Zealand DollarPLN Polish ZlotySEK Swedish KronaSGD Singapore DollarTHB Thai BahtTRY Turkish LiraZAR South African Rand

Exchange rates

When you buy a currency, you willsimultaneously pay for it with anothercurrency at an equivalent value. Foreignexchange rates are therefore quoted incurrency pairs. For example, if the GBP/USDexchange rate is 1.5000, you will receiveUS$1.5 for every Pound Sterling which yousell. Conversely, if you sold US Dollars youwould receive £1 for every US$1.5 you sell.

This same exchange rate may also be shown

as its own inverse, where the exchange rateUSD/GBP = 0.6667 corresponds to theamount in Pounds Sterling needed to buy orsell one US Dollar being £0.6667.

The interbank rate

The published exchange rate is often referredto as the ‘interbank rate’, and is the rate thatthe banks and other large institutions willtrade substantial sums of money with eachother. Private individuals need to exchangearound £5 million to obtain an exchange ratewhich is very near to the interbank rate.

For example, the interbank rate for GBP/EURmay be quoted as: GBP/EUR 1.1550 – 1.1554At this exchange rate, £1 will buy €1.1550 and€1.1554 will buy £1.

Minor and exoticcurrencies

SPOT RATE: Theexchange rate quoted forimmediate settlement.The market convention isfor settlement to takeplace two business daysafter the transaction.

Forwards

Pip: A ‘price interestpoint’ is the smallest pricechange for any givenexchange rate. Manycurrencies are priced tofour decimal places, sothe smallest movement isoften 0.0001.

So far we have looked at exchange rates inthe ‘spot’ market. The spot market exchangerate is quoted for immediate settlement ofcurrency transactions, although byconvention the settlement normally takesplace two working days later.

Foreign exchange markets also quote what isknown as a ‘forward’ exchange rate. Aforward is an agreement to fix the rate ofexchange now at which a set amount of onecurrency will buy a set amount of anothercurrency on a specified date in the future. Formany currency pairs, this can be up to twoyears ahead.

One reason to use a forward is to fix the costof buying your foreign currency at a futuredate, even if the currency is not neededimmediately. Fixing the rate removes thepossibility of exchange rate fluctuationshaving a detrimental effect on your currencypurchase. Ultimately, fixing the rate fixes thecost of your currency.

Why the forward rate is often different to thespot rate

The forward rate can look quite differentfrom the spot rate. For example, the threemonth forward exchange rate for GBP/AUDcould be 1.6644 when the spot rate is 1.6500.

Many people assume this is because theforward rate is an estimation of where thespot rate will be in the future, or that you arepaying a charge to secure a future rate, butthis not the case.

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In fact, the difference is a result of theinterest rate disparity between the twocurrencies. In our example, we will assumethat the interest rate in the UK is 0.5% perannum (or 0.125% over 3 months) versus aninterest rate in Australia of 4% per annum (or1% over 3 months).

As you do not take delivery of the AustralianDollars for three months, you are also notpaying the Sterling cost for three months.Whilst benefiting from knowing the quantityof Australian Dollars you will receive, you areforegoing the Australian Dollar’s higherinterest rate during this period.

However, this cost is offset by you receiving ahigher (better) rate for buying AustralianDollars forward than would otherwise be thecase in the spot market. This is shown in theexample below:

Australian interest rates are 4% or the equivalent of1% over three months. UK interest rates are 0.5% orthe equivalent of 0.125% over three months.

Therefore to calculate the three-month forward rate:

Spot rate x (Australian three month interest rates /UK three month interest rates) = forward rate1.6500 x (1.01 / 1.00125) = 1.6644

The cost of buying AU$100,000 at 1.6500 (Spot) =£60,606.06

The cost of buying AU$100,000 at 1.6644 (threemonth forward) = £60,081.71

a difference of £524.35 to buy forward.

However, the cost of you holding the £60,081.71 forthree months and foregoing an additional 0.875% (1%- 0.125%) interest is £525.71

The difference is negligible.

In this example, the Australian Dollar is saidto trade with a forward discount relative toSterling; meaning Australian Dollars can bepurchased more cheaply in the forwardmarket compared to the spot market. Instable market conditions, if a foreigncurrency has a lower interest rate than thePound, the exchange rate for buying thatcurrency will typically be lower in theforward market than the spot market.

This concept of ‘interest rate parity’ is one ofthe most important theories of how exchangerates are determined. If this did not hold,and for example the spot and forward rateswere equal, an investor could quite simplymake a risk-free profit; any holder of Sterlingcould buy Australian Dollars in the spotmarket and simultaneously enter into aforward contract to convert back to Sterlingin three months time, thereby pocketing theAustralian Dollar’s higher interest rate at nocost. If this were to occur, market forceswould quickly move the spot and forwardrates to eliminate this arbitrage situation.

Forwards: An example

Example - The GBP/AUD spot rate is 1.6500

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Exchange rates - the value of one currencyrelative to another - are affected by a widevariety of events, both economic andpolitical. Assuming a floating exchange ratesystem, where exchange rates are freelydetermined by supply and demand, thefollowing are some of the key factors thatinfluence the foreign exchange market.

Inflation

Suppose the same DVD can be bought in theUK for £10 and in the US for $15. It wouldseem reasonable to expect that theSterling/US Dollar exchange rate should be1.50, such that the £10 and $15 costs of theDVD are equal. If in the year ahead, there isno inflation in the UK, but prices rise in theUS by 10% so that the DVD in a year’s timecosts $16.50, Sterling would need toappreciate 10% (i.e. Sterling / US Dollar =1.6500) to restore equality between the pricesof the DVD in both countries.

This theory of ‘Purchasing Power Parity’suggests that currencies with a low rate ofinflation should tend to appreciate againstcurrencies which have higher inflation. Theevidence surrounding this theory can be

mixed, especially when considering shorter-term influences, and the many other factorsaffecting the rate. For example, in a lowinflation environment, a currency might infact react positively to higher inflation ifinvestors anticipate decisive central bankactions (in the form of interest rate rises) tocounteract a rising inflation threat.

Interest rates

During periods of low risk, money will tendto flow into currencies where the expectedreturn is high and increasing – i.e. thosecurrencies with a higher interest rate, or aninterest rate which is expected to rise.Changes in real interest rates (i.e. afteradjusting for inflation) are therefore animportant influence on exchange rates. If acountry decides unexpectedly to raiseinterest rates, real interest rates will increase.This will also apply downward pressure toinflation, further boosting the real interestrate and leading to an appreciation of thecurrency.

Currencies which offer a high interest ratehave historically benefited from so-called‘carry trades’; a risky strategy of investing in

What factorsdetermineexchange rates?

Fact: An unexpectedUK base rate rise inJanuary 2007, causedGBP to reach 1.525against the Euro; thehighest level since June2004.

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high interest rate currencies and assets usingfunds borrowed in a low interest ratecurrency such as the Japanese Yen. Thisstrategy is linked to risk-appetite and strongglobal stock market performances. However,this benefit may prove temporary if marketuncertainty takes hold and risk-appetite islow, as these investment flows arerepatriated when investors reverse their riskycarry trade positions.

Economic performance and stability

A country in which future economic growthis expected to be strong may attract capitalfrom investors looking for the potential of

high returns. Therefore, if a nation’s growthprospects improve, higher investmentinflows should lead to an increase in demandand appreciation of that currency.

However, fast growing economies can oftenhave faster growing demand for importsversus their exports. This means less demandfor that currency which can lead to aweakening currency.

Investment climate

As with all investments, investors like higherthan expected returns but dislike higherlevels of risk. An improvement in a country’sinvestment climate may have a big impact onthe value of its currency, as the lowerperceived risk leads to higher capital inflowsand an appreciation of the currency.

Negative developments for a country’sinvestment climate tend to result in capital

outflows and a depreciating currency.Factors which may affect the investmentclimate include political stability, fairness inthe legal and tax systems, and freemovement of capital.

Commodity prices

Some currencies are often referred to as‘commodity currencies’. These are thecurrencies of countries which obtain a largeproportion of their export earnings fromgold, oil, or other raw materials. Since theireconomic fortunes are strongly tied tocommodity markets, movements in thesecurrencies are often closely related tocommodity price movements. ‘Commoditycurrencies’ include the Canadian, Australianand New Zealand Dollars, and the SouthAfrican Rand.

Pegged exchange rates

Smaller countries, often in emergingmarkets, may decide to peg or fix theircurrency to another major currency such asthe US Dollar or the Euro. A major advantageis it can reduce exchange rate volatility,thereby facilitating trade and investment. Italso imposes discipline on governments,which would often be prone to adopting

inflationary policies. If countries run intoeconomic problems and the system loses itscredibility, there will be enormousspeculatory pressure to devalue the currency,bringing with it major economic disruption.

An interesting case is the Hong Kong Dollar,which since 1983 has been pegged to the USDollar at a rate of HK$7.8 = US$1. Through acurrency board system the entire supply ofdomestic currency is fully backed by anequivalent amount of US Dollars.

Quantitative Easing (explained)

Quantitative Easing (QE) has recently beenused by central banks, including the Bank ofEngland, to increase liquidity and stimulateeconomies to recover from the ‘creditcrunch’. QE involves the creation of centralbank money, normally used to purchasegovernment and corporate bonds. The aim isto increase the money supply, and thereforestimulate the economy by increasingspending and output. The extent of thepolicy and its perceived success have a directimpact on the strength of a currency.

However there are concerns over itseffectiveness, and the potential inflationaryimpact. QE was famously used by theJapanese government (unsuccessfully for themost part) during the 1990’s.

Technical analysis

Technical analysis, or the use of historicalmarket data to forecast future pricemovements, has long been applied to stockmarkets on the assumption that patternsoften, but not always, repeat themselves.Since the foreign exchange market isgenerally accepted to be the best ‘trending’

Fact: In 2009 the USlowered interest rates tocombat the growingeconomic crisis. Thisapproach was seen asproactive in restoringstability which benefitedthe US Dollar.

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market of all, extracting price movementscan also be applied to foreign exchangemarkets. Once the beginning of a pattern hasbeen identified, the future behaviour ofexchange rates can then be projected,although traders will not always be correct. Itis important to remember trends can bebroken and reversed; missing them can becostly.

There are many types of technical indicatorsand charting studies, but two of the mostimportant in detecting turning points or thestart of a new price trend are ‘support’ and‘resistance’ levels. Often when you look at achart, you will see the price drops to acertain level, and then rises again. This isbecause market forces drive the price downuntil it reaches a level at which investors arewilling to buy. This point is known as thesupport level, as it is the price where buyers

come into the market and ‘support’ the price.Going the other way, often a price willrepeatedly reach a peak and then drop down,as that is where sellers will take profits. Thisis known as the resistance level.

Fact: During the creditcrunch, countries rich innatural resources (e.g. oil,base metals etc.) sufferedfrom falling demand andprices for commodities fell.Their economic prospectsand currencies weakenedas fears of a globalrecession intensified.

This chart is an example of support and resistance. The exchange rate is in a downward trend and tradingbetween its lines of support and resistance. when the exchange rate hits a key historical level of support at1.0 the trend is likely to be reversed.

Support and resistance

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1.4

1.2

1.0

Time

Exch

ange

rat

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Resistance

Support

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There are various ways to buy and sellcurrency depending on your need and yourgoal. Do you need cash for a holiday or areyou buying an asset abroad, such as aproperty? Are you looking to makespeculative gains or does your company needto make or receive international payments ina foreign currency?

Whatever your need, the key is to make themost of your money by considering youroptions at an early stage and by shoppingaround for the best exchange rate and thebest service for you.

Travel money

There are now a number of different ways tobuy travel money; either before you travel orwhen you arrive at your destination. Themain points to consider are: the rate ofexchange you receive, commission charges,fees and the security of your cash.

Notes and coins

The majority of people will want to have a

small amount of currency in notes and coinsfor when they arrive at their destination topay for immediate expenses such as taxis.

Do not buy your currency at the airport!Leaving it to the last minute and buying atthe airport will typically result in a terribleexchange rate and often a commissioncharge.

Shop around before you go as you can saveon commission and over 3% on the value ofyour transaction. Beware of ‘commissionfree’ deals and look for a competitiveexchange rate.

You will usually find a better deal onlinethrough a recognised bureau de change asopposed to a travel agent or bank. Mostonline providers will give free airportcollection or charge a small fee for homedelivery. Also check what the buy-back dealis for when you convert your money back toSterling.

Travellers cheques and cards

Few holidaymakers will want to buy all theircurrency in notes and coins in advanceowing to the risk of loss or theft.

How to access the foreign exchangemarket

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The answer used to be travellers cheques.Whilst these still offer a good solution, thereare now more portable and easy to usealternatives; such as debit cards, credit cardsand pre-paid cards. They are all portable,widely accepted and safer than cash.

Pre-paid cards work by loading your chosencurrency onto the card in advance of using it.The cards can be used in cash-points, overthe counter and are typically accepted in thesame locations as major credit cards. Theyare more secure than cash because you willtypically be asked to enter your PIN to usethe card. The amount available to spend islimited to the amount on the card and isessentially a ‘pay as you go’ card.

Card charges

The amount you are charged for using a debit,credit or pre-paid card will depend on the bank and card provider and it is worth findingout what the charges are before you go.

3 Is there any interest to pay on credit cardpurchases made abroad?

3 Is the exchange rate competitive? Howdoes it compare to a bureau de change?

3 Is there a cash withdrawal fee? This isgenerally around 2% of the value fordebit cards, but can be more with creditcards.

3 Are there any account or inactivity fees?

3 How much interest are you charged if youdo not settle your credit card bill on time?This is particularly important for longertrips.

3 Is there a charge to top-up your pre-paidcard?

The nickname given tothe US Dollar"greenback" originated asa name for DemandNotes, non-interest noteswith green backs issuedby the US in 1861 tofinance the Civil War.

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Foreign exchangefor the speculatorThis section looks at ways to speculate fromexchange rate movements over and abovebuying and holding a currency.

A growing number of experienced investorsare using derivatives to gain exposure tocurrency markets. Derivatives typicallyrequire you to deposit a small percentage ofthe total amount of currency you are buying,for example 2%, but allow you to benefit orlose from the movement of the total asset.This is often referred to as ‘gearing’ or‘margin’ trading.

In simple terms, at an exchange rate of€1.1500, £100,000 can buy €115,000. You would be required to pay a 2% deposit ofonly £2,000 to control €115,000.

If the exchange rate falls to €1.10 your€115,000 buys £104,545.45. A £4,545.45 profitfrom your £2,000 deposit (227% gain). Youwould receive £4,545.45 plus your £2,000deposit.

However, if the rate rose to €1.2000 your€115,000 would only buy £95,833.33; a loss of£4,166.67 (a 208% loss). Your £2,000 depositwould be used up and you would owe afurther £2,166.67.

Contracts for Difference (CFDs), FinancialSpread Betting and Forex trading all provideaccess to currency speculation. This allowsyou to potentially benefit from the movement

in the exchange rate with any profit or losssettled without having to receive the fullamount of currency bought or sold. They alsogive the ability to take a view that anexchange rate will either rise or alternativelyfall.

It is not, however, for the faint hearted. As inthe example above your loss is not limited toyour initial deposit. Any loss can quicklyexceed the initial deposit requiring you tomake further payments. This type oftransaction represents a cost-effective way ofhedging other investments with a foreignexchange exposure, although it is high risk.Before investing we suggest that you fullyunderstand the risks associated with theseinvestments as they are not suitable for mostinvestors. Please seek independent advice ifyou have any doubts about this type oftransaction or its suitability for you.

Foreign exchange trading and currencyhedging can also be achieved throughFutures and Options.

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Options

An Option gives the buyer the right, but notthe obligation, to buy or sell a currencywithin a predetermined time period and at apredetermined exchange rate. The buyer hasthe right to decide whether or not thetransaction will eventually take place,assessing if it’s worthwhile compared to theunderlying exchange rate. If it is cheaper tobuy or sell that currency in the market asopposed to taking up the Option, the buyerwill forego the premium they paid.

The seller of the Option will be required tofulfill their obligation if called upon to do so.The seller will benefit from the buyer’spremium, whether or not the Option isactually taken up.

Futures

A Futures contract is a commitment topurchase or deliver a predetermined amountof a currency at a predetermined exchangerate on a set date in the future. Unlike anOption, there is an obligation for the buyer tofulfill the Futures contract.

These are derivative products and someOptions and Futures contracts mean that youcould lose more than you initially deposit.Please ensure you understand the risksinvolved and seek independent advice if youare in any doubt as to whether they aresuitable for your investment needs.

FREEGuide to CFDs & Spread Betting: Visitwww.HLMarkets.co.uk orcall 0117 988 9915 for ourfree guides, or furtherinformation.

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If you need to buy a larger amount ofcurrency, for example to pay for a propertyabroad, there are significant savings to bemade and you should consider ways toreduce your currency risk.

You can arrange your currency exchange andonward international payment with mostbanks or a currency broker. The benefits ofusing a broker rather than a bank are thespecialist services a broker can provide:

1. Firstly, brokers typically offer morecompetitive exchange rates than thebanks. The exchange rates can make adifference of up to 3% of the transactionvalue when dealing with exoticcurrencies, but is typically about 2% onmajor currencies - that’s a saving of£3,000 on a £150,000 property.

2. Secondly, and perhaps more importantly,brokers can offer you a range oftransactions enabling you to fix theexchange rate in advance of when youneed the currency – and therefore fix thecost of your purchase. These types oftransactions (forwards) are discussed onpage 6.

3. Brokers can also provide you withinformation on what is happening in thecurrency market, via free currency reportsand their specialist currency dealers.

Ensure you are dealing with a reputablecompany who will deal with your transactionand ongoing international payment in aprofessional and secure manner.

Using forwards to minimise exchange rate risk

When you agree to buy an asset in the UK,for example a property, the cost in Sterlingdoes not change from the date of theagreement to the date on which you pay forit. When that asset is abroad and you arerequired to pay in a foreign currency, the costto you in Sterling will fluctuate along withthe exchange rate.

This is a considerable risk when you considerexchange rates can move by over 10% in afew weeks during extremely volatile times.This is a risk you might be willing to take, butit is important to consider the option to fixthe exchange rate and fix the cost so youdon’t run the risk of having to pay more thanyou initially thought.

Buying larger sums of currency andinternational transfers

The 8 billion U.S.notes printed eachyear are enough towrap around theearth’s equator over30 times.

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For example, you agree to by a property inFrance at a cost of €200,000, but payment forthe property is not due until completion inthree months time. The present spotexchange rate to buy Euros is quoted at€1.1500, or alternatively the three monthsforward exchange rate is quoted at €1.1438.

You have a number of options available toyou, but your first decision is whether to fix the exchange rate or take a view on which waythe rate will move over the three months:

i) You decide to do nothing in anticipationthat the rate will improve.

You wait until the payment is due to be madeand exchange Sterling into Euros in threemonths’ time. Since you do not know whatthe exchange rate will be at this future time,this option has a potential risk.

At an exchange rate of €1.1500 the cost of€200,000 is £173,913.04.

If the rate falls to €1.1000 the cost to youincreases by £7,905.14 to £181,818.18.

If it rises to €1.2000 the cost to you falls by£7,246.37 to £166,666.67.

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ii) Alternatively you decide to fix theexchange rate now.

By fixing the exchange rate in advance youwill fix the cost to you in sterling against thenumber of Euros you are buying.

In our example, we have used a three monthforward rate of €1.1438. The cost of your€200,000 is therefore known at the outset tobe £174,855.74 and will not change over thenext three months.

Although you would not receive the benefit ifthe exchange rate subsequently improved,you do know if the rate worsened yourpurchase will not rise above the budgetedcost.

Extra flexibility

You might find having a fixed date for aforward contract is a little restrictive. Thereare various flexible forwards available to youwhere you can tailor the transaction to meetyour needs. You can fix the rate in advancebut set a date range of when you might needthe money. Alternatively, you can elect to fixthe rate for the full amount of currency, butelect to receive smaller segments of thecurrency as and when you need it.

TIP: If you think the exchange rate will movein your favour but you don’t want to take thatrisk with the full amount of currency youneed, you can choose to fix an exchange ratefor a proportion of the amount required fromthe outset, and convert the remainder at theprevailing exchange rate when the propertypurchase is completed. This methodmarginally reduces your risk whilst retainingsome exposure to exchange rate fluctuations.

Transferring your funds back to the UK

By shopping around and using a currencybroker, you can also make substantialsavings on foreign exchange when bringingmoney back to the UK. Being prepared to actwhen the exchange rate is right for you is

important and you should therefore checkwith your overseas bank on their transferprocedures and costs. Do you need to be atthe bank in person, is a letter required, orwill an online instruction or telephone callsuffice?

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Regular transfers

You might choose to send money abroad on amonthly basis; this might be to pay amortgage, or just to cover your livingexpenses abroad. Transferring smalleramounts regularly can be expensive intransfer fees, time consuming and oftenattract a poor rate of exchange.

Specialist brokers will usually provide ahassle-free way to send money abroad. Thecosts and exchange rates are typically betterthan the banks. You can often arrange toconvert your funds at either a fixed orvariable exchange rate and once set up, yourfuture payments are made by Direct Debit soyou don’t have to make a new payment eachmonth.

Corporate foreign exchange

Large institutions making large andnumerous international payments willtypically have their own treasurydepartments with a direct link to a foreignexchange trading platform.

Small to medium sized businesses willtypically rely on the services offered by theirbank. Few banks will provide competitiveexchange rates and methods for reducingrisk. It is therefore worth shopping aroundfor the best rate and consider using acurrency broker instead of a bank. Currencybrokers will typically offer rates which couldsave your business between 1% and 2% oneach transaction which has a direct impacton your profit margin. Currency brokers arealso more likely to provide your companywith a specialised service and a dedicateddealer.

Getting the best deal on foreign exchange:

1. Use a reputable currency broker instead of ahigh-street bank to get the best exchange rates.

2. Don’t leave foreign exchange to the last minute.Consider your options. Do you need to fix thecost of currency, make an immediate transfer, orare you in a position to speculate on waiting forthe exchange rate to improve?

3. Look out for key economic events – theseinclude regularly scheduled data such as thefactors on page 8 - 10, or leading indicators ofthese factors.

4. Make the most of free information. Register forfree currency reports.

5. Your options may seem complicated – call yourbroker to find out what is happening in thecurrency market and the options available. Agood broker will guide you through the process.

FIVETOPTIPS

YOURSFREE

Hargreaves Lansdown Currency Service is a trading name of Hargreaves Lansdown Stockbrokers Limited which is a wholly owned subsidiary of Hargreaves Lansdown Plc.

Company registered in england & wales no. 1822701, registered office, one College Square South, anchor road, Bristol, BS1 5HL.

(ref : HL Currency Service 0810)

The aim of the HL CurrencyService is to provide our privateand corporate clients with the bestinformation, the best service and thebest exchange rates.

In a recent survey 97% of our clients judgedour service as ‘good’, ‘very good’, or the mostpopular choice of ‘excellent’.

The benefits of the service:3 Low-cost exchange rates 3 Direct access to a currency specialist3 Free regular currency reports by email 3 No commission 3 A global choice of currencies3 The facility to fix the exchange rate for up

to 2 years ahead3 Fix the exchange rate for a flexible

timeframe3 Make multiple transfers at the same

exchange rate3 Regular monthly transfers 3 Convert foreign currencies back to sterling

“This was the first time I used a broker. Youwere recommended by a friend who had agood experience. I was most impressed howeasy it all was”. Mrs Hill, Northumberland

Hargreaves LansdownCurrency Service

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For further information pleaserequest the HL Currency Servicebrochure. Visit our website www.HLCurrency.co.ukor call our currency specialistsnow on 0117 311 3257