Currency Exchange
The human race has a long and rather convoluted history; economics is merely part of the tangle. As tangled as it is, it's no wonder we humans can't just decide on a single way to pay each other off and buy stuff online. The sad truth is, we can't. Because of that, we have to worry about trying to work between Euros and dollars, dinars and yen, and any number of other currencies in use all around the world.
Ever since the first stages of globalization, currency has been an important issue. In the 17th and 18th centuries, worldwide commerce first began to call for a currency that could be used across the board by merchants everywhere. At that time, the currency of choice was the famous Spanish dollar, or “pieces of eight,” made famous by countless pirate tales and popular movies today. This Spanish currency was legal tender on most markets, and its connection with naval commerce and international trade of that time period is still strong in our minds today.
Today, though, a different currency is foremost. At the moment, that currency is the American dollar. American dollars, or USD in standard international abbreviation, are used around the world for a number of purposes. Internet based companies, for instance, primarily use United States Dollars for their commerce, and online services exist to convert other currencies into United States Dollars. The United States Dollar has been strong in non-digital markets, as well – in 1996, it counted for around two thirds of the world’s foreign exchange reserves. In 2001, Robert Galpin wrote in Global Political Economy: Understanding the International Economic Order that between 40 and 60 percent of all international transactions at that time were conducted in United States Dollars.
In the last few years, the United States Dollar has begun to see a fall against the newer and more valuable Euro. Used across Europe and in consideration in other countries for possible introduction in the next decade or so, the Euro is worth approximately 1.35 US dollars at the moment and has just recently surpassed the dollar in total worldwide value in circulation. As of the last month in 2006, the Euro was at 610 billion in circulation, equivalent to approximately eight hundred billion United States dollars. The Euro has continued to rise against the dollar recently and, if trends continue, may become the leading force in international economics.
The only other serious competitor in the international currency market is the Japanese yen, which gained some use worldwide during the 1980s, but relapsed slightly in the Japanese economic recession a decade later. These days, most countries peg their own currencies against the United States dollar, but more are increasingly switching to the Euro or the yen as the dollar falls in value against its competition.
All of this is very interesting if you plan to go into international economics, but what if your interests are more personal? What if, say, you want to take a vacation this summer to Thailand or England or France or Japan, and you want to be able to buy a few souvenirs while you’re there? Do you need to take anything more than American dollars?
The answer really depends on where you plan to go. Some countries accept United States dollars as currency – Mexican businesses and merchants, for instance, often allow you to pay them directly in American dollars without having to convert first to the country’s official currency, the peso. In cases like that, you’re saved the trouble of having to look for currency exchange rates and local currencies before you go. Check with a travel agent or read a travel guide to see if the locals will accept American dollars.
Many places, such as England or most of Europe, for example, rarely accept American dollars as legal tender. In those cases, you’ll have to either convert some cash before you go or visit an exchange table when you arrive. Many tourist oriented currency exchange tables artificially inflate exchange rates in order to make a profit, so you’ll probably be better off going with a more official and less “profitable” source. Check into the currency exchange rates before you leave.
When you’re traveling somewhere and you need to exchange some currency, the first thing you should do is find out what the currency exchange rates are. These days, that’s easy – you can get live foreign exchange rates simply by going to your Internet browser and searching for “currency exchange rates,” and then following the live foreign exchange rates website links that come up. Just write down the comparison (American dollars to Euros, for instance, if you’re going to France), or comparisons you’ll need on your vacation, and keep it with you to compare currency exchange rates against when you find places to change money.
Once you’ve determined what the rates are, it’s time to get some money. It’s always a good idea to have some local cash before you visit another country, especially if you plan to arrive late at night when most foreign currency exchange services may be closed or shut down for the night. Many large banks offer currency exchange tables for your convenience. You can also order foreign currency online by simply sending a money order and having the money FedExed to your location. Getting money before a trip is always a good idea. If you’re too late, though, many airports also offer foreign exchange tables for your convenience – though you may have to pay a higher fee.
Sometimes it’s just easier to change currency when you arrive in the country you’re visiting, rather than changing a lot before you leave and then having to carry large amounts of cash around with you as you tour your destination. If you’d rather just keep cash or a credit card and exchange to a foreign currency as you need the money, most countries offer exchange rates to the local currency from major currencies like the dollar, pound, euro, or yen. If you need money, all you have to do is visit one of these services, pay a transaction fee – often determined by percentage or inflated foreign currency exchange rates – and get your local currency.
The first place you’ll see on arrival at your destination is the foreign exchange currency counter at the airport. This counter makes its money by charging higher currency exchange rates, so you’ll save money if you can wait and visit a major bank in the area. Many banks in other countries offer ATM machines that should work with your debit or credit card, and will give you the best exchange rate possible for your money. You’ll be most likely be able to use that machine if your card is one of those with a basic four digit pin number.
There is one positive thing about the recent shift in global currency values. Because the American dollar is falling against the Euro, you can use this opportunity to use American dollars to buy Euros through a banking service that offers exchange rates, and ride the rise of the Euro – global economies, when utilized properly, offer an amazing amount of profit to the shrewd investor. Trends tend to be fairly gradual in the national currency world, so it’s a safe and smart investment if you’re trying to think of where to seed your money to reap a bountiful harvest later.
If you’re considering investing in foreign currencies, ask your local bank about the possibility of expanding your account to include a foreign currency account. If, say, you’re an American businessman looking to buy several thousand Euros for investment, ask your bank if you can open a Euro account, or, if not, try getting an overseas banking account somewhere in Europe. This way, you can simply transfer funds to that account – converting them into Euros in the process – and bring them back after the Euro has gone up another thirty or forty cents. If you have enough invested, even a few cents of profit per dollar can add up to a significant amount of money.
If you’re planning to invest in foreign currencies or even just want to travel to another country and get some funds shifted to the local currency, you’re going to want to make sure you know what the rates are. By knowing the rates before you start looking, you can know for sure just how much you’re spending, and whether a currency exchange service is as reputable as they say they are. Currencies around the world are very different, and it’s impossible to keep track of all of them, so make sure you know how to find out what you need before you visit another country or invest in other currencies besides the currencies you use now.
The best way of find out that information is simply to use the Internet. Live foreign exchange rates are posted twenty four seven on web sites around the world, making it very easy to see what the foreign exchange rates are. If you’re investing in foreign currencies, knowing the information so quickly allows you to keep track of your investment with minimal effort and trouble. If you don’t have access to the Internet at any time, you can also call your local bank or library to have them look up the appropriate information.
If you want to get some foreign currency in cash before you leave on a vacation or something similar, one easy way to do it is to get online. Services abound that allow you to simply fill out a simple payment form and have cash shipped by Federal Express to your front door. These services work exactly in the way other online retailers do – you specify what you want (which currencies and how much), fill out your billing information, and click next – and bingo, instant access. The cash is packaged and mailed to your location, where you can then store it to bring on your next vacation. It always pays to be prepared.
Shipping cash isn’t as dangerous as it sounds. For one thing, it’s foreign cash, which means it’ll be less of a target than if you were just mailing hundreds or something similar. Second, it’s in an unmarked box. Third, tampering with the mail is a felony, and it would take a lot more than a few Euros to make it worth it. Fourth, if you’re worried about mail theft, you can simply ensure your purchase to hedge your bets and give you peace of mind.
When you’re traveling, it’s always good to make sure you have enough for whatever you need to do. It’s not a good idea to carry large amounts of cash, especially in locales where crime is more of a problem, such as large cities like New York or London. If you look different – like a tourist – you’ll be even more of a target, so make sure you know how to protect yourself from those wishing to get a hold of your hard-earned foreign currencies.
One thing you can do is simply look confident. Pickpockets and other petty criminals are far less likely, statistically speaking, to target a person who looks alert and able to handle him or herself, and will instead look for “soft” targets. If you can use body language to repel attackers, your money will be all that much safer. Also, don’t follow the hype – money belts aren’t all they’re cracked up to be. It’s a classic sign of a naïve tourist to put a lot of cash in a money belt in the belief that this will keep it safer. Unfortunately, criminals know that, and many pickpockets train specifically to target belts for quick cash.