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Exchange Rate Crisis? What Exchange Rate Crisis?

Jun 12, 2008
It's a sorry state of affairs we seem to have ourselves in at the moment, with the gloomy news all around us that we are facing a financial crisis worldwide, with currencies flopping about like stranded fish, and exchange rates either going through the roof or sinking below the basement, depending on which way round you're looking at it. Those businesses and investors who work on an international or global scale are struggling to identify the best way to work, and simply keeping abreast of the current exchange rates is almost a full time occupation.

Our global society now means that we no longer have to consider buying products locally, or even in our own currency. Buying online gives us the opportunity to not only shop around for the best deal, but also for the best currency. Many online traders don't have their conversion rates from one exchange to another linked to an independent conversion tracker. In these cases, you can often find that by switching currencies, you can get a better deal. I saved fifty pounds by simply buying in the country's local currency than by buying in my own from an online retailer - it's not hard to save quite a significant sum.

If you're in the property market, and in particular looking at investing overseas, this problem with sliding exchange rates becomes extremely challenging. One day the deal looks good, but within a couple of weeks you're starting to look at the same deal and realise that, as a direct result of the exchange rate, you've just lost several hundred pounds, dollars or Euros, and possibly even more than this. Even investing in a fairly modest 100,000 property, a change in exchange rates between pound sterling and Euros of just a few pence can make several thousand Euros difference. If you're quick, then this can be good news, but usually you have enough to worry about without pouring over all the bank rates and exchange rates and currency conversions.

However, every cloud has a silver lining as they say, and in this case, there are a few companies that are still able to offer consumers deals which fly in the face of such bad news. Imagine being able to find a company that can promise to lock in the exchange rate that we had three months ago? Incredibly, I have come across just such a company, and I'm sure there are others out there too. At the moment, using my favourite online currency convertor, the Euro is rated at 1.26 to the pound sterling. Yet, I have found a company offering investors the chance to buy Spanish property at a rate of 1.40 to the pound sterling! Do they even know what's happening in the world out there? Do they care?

To put this kind of benefit into perspective, let's say you were looking to buy a very reasonable 150,000 property over in Spain, but were looking at an exchange rate of 1.26 to the pound - which is normal. By taking advantage of the 11% difference in rates that this company is offering, you could make a saving of over 16,500! I defy anyone who's considering overseas property investment to turn their nose up at such a chance!

Normally when you are looking to invest in property overseas you will want to make sure that you research the exchange rate first of all, and once it has been identified, it is agreed by all parties and written into the contract. By doing this you safeguard yourself against any unforeseen global crisis in monetary exchange. Finding yourself a company willing to backdate the exchange rate to the early part of this year, before the crunch caused such a downturn in rates across the world is of enormous benefit, naturally, and is well worth further investigation. It's finding companies like this that are either absurdly generous, or simply unwilling to accept the pessimism of the banks that makes the whole prospect of moving into the sun a whole lot sunnier!

If the prospect of purchasing a property oversees at a ludicrously helpful exchange rate wasn't enough, you could also bear in mind the other benefits and advantages that this implies. Clearly we're all realistic enough to realise that property rates fluctuate, and there is never any guarantee of prices holding, and in the short term they may even dip. This is okay for those who are looking for long term investments, but if you're looking for a relatively quick sale, you may find the market less than predictable. What is predictable however is that you have a margin for error, or at least a safety margin. By purchasing a house at a highly optimistic rate, even if prices dipped by a few percent, you're protected by an enormous 11% buffer! There's nothing to stop you from selling the property on later at the normal rate - just don't tell anyone the enormous difference between the exchange rate you paid and the one you're selling at!

If you're considering investing in property abroad for the first time, you may already have some idea of the differences between buying at home, and buying in a different country. With various regulations and requirements that take a good deal of getting used to, you may find that the budget you had in mind will be stretched a little further than you anticipated once the cost of lawyers, solicitors and other paperwork comes into play. By fixing an exchange rate well below that of the normal going rate, you help to give yourself enough slack to easily absorb the extra costs that may be incurred. All in all, it's an offer well worth you taking further if you're serious about investing.
About the Author
If you are searching for some super spanish property deals then check out this URL. They offer preferencial exchange rates of 140 euros to the pound on selected properties on the Costa Blanca and Costa More thanlmeria. More than 15% saving on current rates on some fantastic Spanish properties
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