Kiwis shun help in forex dealings
The Independent, Wednesday 17 October 2007
Kiwis shun help in forex dealings
Bob Edlin, October 17, 2007
Up to 94% of New Zealanders did not seek professional advice on foreing exchange delaings in the past two years, even when conducting their largest foreing exchange deals.
Many took a "do-it-yourself" approach, getting their information from exchange rate boards, nespapers, television or the internet to obtain foreign exchange information, according to research conducted by Colmar Brunton for HiFX.
Thirteen percent of New Zealanders who made foreign exchange transactions didn't bother seeking information.
Colmar Brunton conducted the research in an online survey from August 7-12. It interviewed 317 New Zealanders.
The results show few people go to a specialist foreign exchange company for help.
It shows 87% of those surveyed would use a bank to conduct a large foreign exchange transaction.
Just 5% said they would use a specialist foreign exchange company.
The respondents who said they would use a specialist foreign exchange company were significantly more likely to be higher-income earners than those that wouldn't, with total household incomes more than $100,000.
Half of those surveyed, when asked what tools or services would make foreign currency transactions easier, said securing an exchange rate when it is favourable, even if they didn't have all their money available at the time.
This could be achieved by using a forward contract, one of the services provided by foreign exchange specialists.
HiFX conjectures, New Zealanders are losing millions of dollars in mis-guided deals, because of the unpredictable New Zealand dollar and the failure to seek professional advice.
"Exchanging currency can be a minefield for many if the associated risk is ignored," HiFX foreign exchange specialist Paul Janssen said.
The timing of the foreign exchange transaction and the strategy applied was critical to obtaining the desired outcome.
He shows what can happen by citing forex shifts between July and August this year.
The exchange rate for NZD/USD traded between US81c and US66c.
This could have severely bruised the finances of a family moving to the US, requiring, say, US$50,000 to contribute toward their relocation costs.
Locking in a rate when the New Zealand dollar was trading at US81c would have cost them around NZ$61,728.
Less than a month later the cost would have jumped to NZ$75,757.
Janssen, not surprisingly advocates dealing with specialist forex firms, rather than banks.