- Posted by Jason on May 14, 2015 in Market
Foreign Direct Investment (FDI) in India is booming – but more in some industries than others. We’re going to take you through the ins-and-outs of the seven most popular opportunities for FDI in India. We’re also going to take a look at any restrictions or requirements you may run into along the way.
What is FDI?
FDI is an investment into a company, made by someone in another country – a Chinese company buying a mining company in Australia, for example. Generally, investors are looking to achieve a controlling interest in the company (the accepted minimum threshold, set by the Organisation for Economic Co-operation and development, is 10%). FDI is common and has taken place in India since around 1991 with the introduction of the Foreign Exchange Management Act.
Limitations of FDI
Recent policy measures place some restrictions on FDI in specific industries, such as a 49% limit in the defence sector. Public sector banks sit at 20% and broadcasting services as well as print media allow 26%. This restricts “outsourcing” of important public services – particularly the media, to overseas investors. (http://www.makeinindia.com/policy/foreign-direct-investment/).
Many sectors, such as power generation and telecommunications have zero restrictions – meaning FDI can flourish.
Some industries, such as gambling and atomic power prohibit FDI entirely, likely due to the fact that such practices are heavily regulated and restricted by the government.
Make sure to research into current economic climate before considering any form of FDI. India currently sits at an inflation rate of around 6.4%, meaning that you’ll require a much higher rate of return to keep afloat above the “eroding” power of inflation. Other issues, such as political stability can also influence investment too – so be careful of this.
Invest in India – Business Opportunities
FDI in telecommunications makes up around 6.9% of FDI into India. As mentioned above, there is no cap on this industry, and it falls under the “automatic route” and therefore doesn’t require the approval of the Reserve Bank of India or the Government. However, establishing a telecommunication network requires excessive amounts of capital (Telenor – a competing FDI telecommunications firm has claimed to have spent two billion dollars on this) and there is serious competition in the industry, despite being a service in high demand.
While India has recently disallowed multi-brand retail trade, single brand retail is still a viable industry for FDI (it has no cap either, but requires government approval beyond 49% investment into a company). Retail typically offers a somewhat small upfront capital investment (compared to other options, such as telecommunications) and therefore has somewhat lower risk. Retail is a particularly difficult industry to gauge for FDI however – as different culture, tastes and preferences will either require additional investment in research or mitigate the lower risk associated with smaller initial investment. Retail appears to be growing reasonably as an industry too – keeping it a viable option for investors.
Construction is the second largest area for FDI in India, weighing in at nearly 10% of total foreign investment. The Indian Government has recently relaxed FDI rules for the sector in an effort to attract more housing, hotels and townships into the country. Minimum cash investments have been reduced to $5 million, enticing investors with less cash who are prepared to take on less risk – making it more ideal for foreign investors.
India possesses the fifth largest electricity generation capacity in the world, but this doesn’t stop it running a shortage. It follows that FDI into electricity currently allows for some great opportunities for those willing to invest the high start-up capital requirements into the industry. India does not cap FDI in electricity, with 3.88% of total FDI surfacing in this industry.
5. Computer Software/Hardware
In recent years the computer software and hardware industries have been one of the fastest growing sectors in the Indian economy, making up around 6% of FDI. This makes it a solid industry to invest in – especially since it faces no investment cap. Software in particular can be created easily on a small scale, with relatively small upfront investment.
6. Drugs and Pharmaceuticals
Drugs and Pharmaceuticals make up around 5.24% of FDI in India. The industry is uncapped, but taking over existing projects requires government approval. This has become a very popular route for FDI in recent years, particularly considering the fact that healthcare is an industry that grows steadily with the population.
The Automobile industry accounts for around 5% of all FDI in India. Japanese companies, particularly Suzuki and Honda, are large players in this field, so competition is stiff. There are no restrictions on automobile FDI, but high start-up costs are to be expected. Considering the common process of vehicle exports, India has become more of an “export hub” in this area, rather than producing for solely domestic purposes. The Automobile industry also looks set to increase in size in coming years as population grows globally.
If you’re looking to transfer money for FDI, OrbitRemit offers low cost, attractive exchange rate transfers between the AUD and PHP. Check out our calculator on the top right hand side of the screen!
- Posted by Paul on May 11, 2015 in Financial Tips
Sending money online has always been seen as uncertain – after all, you have very little control over the transaction once it leaves your account. Fraudsters and scam artists are well aware of this and have a number of tricks to bleed victims of their hard earned cash. We’re going to take you through the most popular of these online money transfer scams, so that you can spot and avoid them.
The victim is sent an unofficial email from a fraudster, claiming to be a bank or money transfer provider. The email includes a link which, when clicked, takes the victim to a phoney recreation of the company’s official website. The victim is then asked to log in with their account number or email and password. The information is then collected by the fraudster and used to steal from the victim. These emails often come with nasty attachments that install viruses or key loggers (which record everything you type into your computer) to help them gather the victim’s information.
Lesson: Be sceptical about emails and links that you receive online. Type addresses into your web browser instead to bypass information fraud. Most companies now warn their users against this kind of theft and make a point to never ask for confidential information via email. Scammers often make mistakes in these emails and fake websites – so spelling errors or unprofessional looking websites are a huge giveaway.
This scam starts off happily enough – two people meet on the internet. Things are great – emails, phone calls, plans to meet up.
And then comes the partner’s sick mother who needs money for an operation or the request for a flight money loan. The requests keep coming – for as long as the victim keeps paying. Unfortunately there’s no fairy-tale ending, at least not for the victim.
Lesson: Be wary of online dating. Meet the person, and expect to know them for a reasonable period of time, before even considering responding to a request for money.
The victim receives a phone call telling them that they’ve won the lottery (or some other large sum of money), conditional to sending a small deposit back for “taxation and fees”. The victim sends the money but never receives any winnings or payment of any kind.
Lesson: “You’ve got to be in it to win it,” goes the surprisingly accurate saying, followed closely by “If it’s too good to be true, it probably is!” You’re very unlikely to win an unspecified large sum of money – even when you do buy a lotto ticket, so be very cautious of anyone telling you that you have “winnings” out of the blue. Also, many countries don’t actually tax or charge fees for lotto winnings, (New Zealand, for example) so if you do win, you technically shouldn’t have to pay a cent!
“No experience needed” and “work from home and earn thousands of dollars a month” sounds like a great offer, right? Unfortunately, this is often a guise for fraudsters to lure a victim. The victim is given a fake cheque to pay for start-up expenses for the advertised position. The victim deposits the cheque and buys supplies – wiring the spare money back to the “employer”. The bank later rejects the cheque and the victim has to foot the bill.
Lesson: If you’re looking for employment, try to research the employer to the best of your ability – if it’s a company you’ve never heard of, be highly suspicious. Most employers won’t actually ask you for payment when you begin a job, so this can also be a tell-tale sign.
5. Advanced Loan Payment
A fraudster offers the victim a loan – with an initial start-up fee. The victim transfers the fee, but never receives the loan money. Scammers often change their business name frequently to avoid detection.
Lesson:Attempt to get a loan from a reputable provider – usually big local banks are the best place to start. Avoiding borrowing money from an online vendor and opt for a brick and mortar store instead, as they’re more likely to be a legitimate lending business.
6. Mystery Shopper
The fraudster advertises “mystery shopper” positions online. They give the respondent a cheque to “evaluate” an online currency transfer website, such as Western Union or PayPal. The victim wires the money, but the cheque bounces a few days later, leaving the victim out of pocket.
Lesson: There’s a pattern here – cheques. Avoid accepting a cheque from anyone you don’t know. Otherwise, ensure that it clears before taking any further action.
The fraudster contacts the victim and tells them that their computer has a “dangerous virus”. They offer to remove this for a fee. The victim either transfers this fee, just to have the money kept by the scammer, or the fraudster directs the victim to “fix” the virus by installing malicious software onto their computer. This software records their information and can be used to steal from them.
Lesson: Strangers cannot detect viruses on your computer remotely. Install a good anti-virus software to combat any legitimate threats facing your computer.
8. Rental Property
A victim, who is looking for a place to stay, is offered to rent a property by the scammer. The victim is required to pay a deposit or a bond, which is transferred and never seen again.
Lesson: Meet any prospective landlord before making any financial commitments.
A buyer of an item sends the victim seller a cheque for a higher amount than the agreed sale price. The victim refunds the difference but the cheque doesn’t clear, leaving the victim out of pocket for the refund value.
Lesson: Again – be suspicious of accepting cheques from strangers until they’ve cleared.
10. The Nigerian Prince
A “prince” contacts the victim, telling them that they are in trouble and need money to retrieve their family fortune. They offer the victim a share of the fortune for a small transfer “in their time of need”. Unfortunately, the scammer keeps the deposit and never contacts the victim again.
Lesson: Avoid transferring money online to a stranger.
Orbitremit is dedicated to the cause of online-fraud awareness and providing 100% safe and secure transfers that you can track online, every step of the way. Check out our calculator on the top right hand side of the screen to find out how much OrbitRemit can save you!
- Posted by Lauren on May 6, 2015 in Financial Tips
If you’ve lived overseas for any length of time, there are certain little secret understandings you share with other expats that other people just can’t get their head around. Here’s a list of our favourites:
1. Language Barriers
On the plus side, you’ll win every game of charades you enter after being an expat for a few months. As long as you learn the basics of the language (“yes”, “no” “fire”) and flail your arms, you’re safe.
2. When You Go Home, You Might Not Find Your Old Favourite Coffee Shop
There’ll always be another one – change isn’t always bad. The waterfront, local landmarks and the natural environment probably won’t be going anywhere!
3. You’ll Become A Human FOREX Calculator
Price tags have to be converted to local currency. So how many rupees will that many pounds cost you?
4. You’re Running Out Of Space On Your Travel Wall
You’ll have to move into a bigger house to fit all of those photos you’ve taken. Just make sure you can get them off when it’s time to go home – and always leave some space for future adventures.
5. You Probably Brought Too Much Stuff
Saving everything seemed like a great idea when you were leaving home. You’ll definitely need that, after all. But did you? Do you actually use that lamp? That expired mouthwash? The paperweight? Let’s be honest here – if you haven’t unboxed it yet, you’re probably never going to.
6. Voltage Adapters
Even if you do want to use that lamp from home, you’ll probably need to go out and buy a converter just to plug it into the wall. It’s okay – you’ve probably got about fifty thousand of them by now. Just don’t leave the house without one or you’ll have to take a trip to the store for number fifty thousand and one.
7. No-One Sells Your Favourite Food
Don’t worry – you’ll learn to love local food soon enough. You might be lucky enough to find a specialist import shop.
8. Immigration Processes
Oh we know – visa renewals are a nightmare.
9. They Want How Much!?
Flights home are always just that bit more expensive than you’re comfortable with. That’s if your Visa conditions allow it. Keep your eyes out for deals! Sometimes time flexibility really pays off!
10. Try Opening A Bank Account – We Dare You.
If you thought Leo Tolstoy’s War and Peace was too long you’re in for a rough surprise. And it’s not nearly as interesting. Not that War and Peace ever was.
11. Permanent Residence
I hope you love paperwork and hold music. Applying for permanent residency involves a lot of it.
12. You Can Pack a Suitcase Faster Than Anyone You Know
The Guinness World record time for packing a suitcase is one minute and six seconds. We’re led to believe that they were an expat too. You can always accept the challenge. But try not to bother packing that expired cold medicine you think will always come in handy.
13. Your Facebook “Places I’ve Been” Map is Looking Pretty Diverse
If you can still distinguish the individual location icons then you’re not keeping pace with the pack!
14. You Might Forget Where You Are When You Wake up in the Mornings
There’s always a weird feeling of disorientation when you open your eyes. Are you still in the UK? Or did you move again to Australia? Hm. Walk outside and feel the temperature – you should be able to gauge your rough location from it.
15. Hello, Tech Support?
Trying to get help with devices that you bought at home is always a nightmare. Unfortunately no-one in your locale has heard of that brand or retailer, but have you tried restarting it? Is it plugged in? Ah okay, just post it back for two years. Sometimes it’s easier to just give up and buy a new one.
16. You Used To Be Scared Of Change – Now You Thrive On It
Consistent relocation makes you a more adaptable and open minded person. Embrace new environments! You won’t ever take things for granted again.
This is so great that you’re happy to forget sliced bread was even a thing. Nothing beats having a conversation with loved ones. Keeping in touch with them can stop you from feeling isolated and homesick. It pays to invest in a good webcam and mic too.
18. “Your Accent Is Different”
I’m not sure if you’ve been told this, but your speaking mannerisms are different from the locals. Many expats are shocked by this fact – after all, no-one ever points it out. Be prepared for stereotypes too. If you’re from Australia, you’re expected to have tamed a kangaroo.
It’s nice to have insignificant change from all over the world. Don’t lose it though – a million dollars is made of pennies. 100 million pennies. So it must be worth keeping them, right? Just keep them on your night stand, in your wallet and in your couch cushions.
20. You’ve Got Friends All Over The Globe
You’ll always have someone to stop in and see on your travels. Having different friends from different cultures makes you more empathetic and insightful.
21. There’s Too Much Month Left At the End of the Money
This happens to all of us – life definitely gets expensive. Make sure you have something saved away. Try and send a little home every now and then too.
If you’re an expat living overseas, OrbitRemit can offer you low cost transfers between countries with modest exchange rates. Check out our calculator on the top right hand side of the screen to see us in action!
- Posted by Hieu on May 5, 2015 in Market
If you’ve recently been exchanging your Australian Dollars for Philippine Pesos, you may have noticed that you’re getting less bang for your buck than you were five years ago. We’re going to take you through the top seven forces impacting the AUD to PHP exchange rate, highlighting the particular reasons behind the recently strengthening PHP.
#1 – Boom!
The World Bank places Filipino GDP growth at around 6% for the next three years. This is significantly larger than Australia, which is sitting at around 2-3%. Strong economic growth makes the Philippines attractive to overseas investors. This pushes up the demand, and therefore the price, of the Philippine Peso compared to the Australia Dollar.
But what exactly is driving this growth? Let’s take a look at a few key factors:
#2 – Remittance
Remittance is money being sent home by overseas workers. This money is then spent in the Philippines on local goods and services – injecting overseas money into the local economy. This provides fuel for the economy through increased spending, driving economic growth.
Total remittance to the Philippines has reached around $24 billion in 2014. While remittance growth is beginning to show signs of slowdown, it’s still a massive contributor to the booming Filipino economy.
#3 – Low Inflation
Inflation is the measure of general price rise over a period of time. As general prices rise, your savings are worth less. In other words, inflation erodes the value of money over time. Investors are scared of inflation and reluctant to invest money into a country with high inflation as a result.
The Philippines currently has inflation of around 2.5% – which is relatively low. Investors are comfortable with this and are happy to invest in the Philippines – driving economic growth through an injection of cash.
#4 – High Interest Rates
High interest rates lure overseas investors with the expectation of high returns on their money. This drives up the demand for the respective currency.
Currently, the Filipino interest rate is sitting at a reasonably high 4%, while the Australian interest rate is sitting at around 2.5%. Investors are attracted by a 4% return, and will gladly invest in the Philippines, increasing the demand for the PHP.
#5 – Business Process Outsourcing
Business Process Outsourcing (BPO) is the outsourcing of specific parts of a business, such as accounting, human resources and customer services. Companies outsourcing to the Philippines has created a large number of jobs, injecting more money into the economy. This has lowered unemployment and increased wages – driving spending and therefore growth.
Be wary though, as high growth like this is historically unsustainable. We’re already seeing signs of remittance slowdown, so it’s realistic to expect GDP to somewhat follow suit. Current slowdown from China may also drag GDP down, due to a global decline in demand for resources and consumer products.
Speaking of China…
#6 – Slow Down, China
China has been driving economic growth at 7% per year for over a decade. However, China’s large manufacturing ability and demand for resources has begun to slow over recent years. Slowdown from such a large buyer has caused global demand to decrease across the board.
This has hit Australia, a strong mining country (due to its rich deposits of precious metals) where it hurts most. Consequently, the demand for Australian exports have fallen dramatically, causing the AUD to sink. While a low dollar makes Australian exports appear cheaper to foreign buyers, there is currently limited demand for key exports such as Iron Ore.
Comparatively, one of the key exports of the Philippines are electronic devices (including components such as semiconductors). Rising demand for these components, fuelled by the digital age, has driven up the price of the PHP.
#7 – Corruption
Corruption runs rampant in the Philippines – bribery, graft and embezzlement are all too common. This scares investors away through less certainty in their investment. Put simply, investors don’t feel safe with a lurking possibility of corruption. Corruption lowers confidence in a country and everything that it produces, driving the demand for the PHP down.
Fortunately, anti-corruption has been high on President Aquino’s agenda who has created tighter requirements of government transparency. Many argue that social media is also contributing to increased freedom of speech, allowing less corruption to occur behind closed doors. (http://www.forbes.com/sites/ralphjennings/2015/03/02/why-graft-is-declining-in-the-notoriously-corrupt-philippines/) Corruption in the Philippines looks set to decline in coming years, slowed by President Aquino and modern technology. If this trend continues, investor confidence in the Philippines will increase and the PHP will likely be boosted against the AUD. However, the election in 2016 could easily turn the tides, thwarting many of Aquino’s accomplishments towards corruption decline.
Comparatively, Australia isn’t affected anywhere near as much by corruption, particularly in business. Investors are therefore more confident in Australian investments.
If you’re looking to send money from the Philippines or Australia, you’ll want to watch the Australia Dollar exchange rate – after all, this will determine exactly how much you’ll come out with on the other side. OrbitRemit offers low cost, attractive exchange rate transfers between the AUD and PHP. Check out our calculator on the top right hand side of the screen!
- Posted by Lauren on May 3, 2015 in Financial Tips
The first time you start an international bank transfer, you’re likely to run into some confusion. There’s so much confusing terminology: ‘SWIFT’, ‘IBAN’ and ‘BIC’. What does any of this even mean? Fortunately for you, we’re going to take you through this step by step – you’ll be a total whizz in no time. We’ll also give you some tips on avoiding large international bank transfer fees.
Step One: Research
As with anything, you want to ‘look before you leap’. You may wish to use your current bank, or a different one, depending on the costs and flexibility. There are three important factors when it comes to transferring money internationally:
Fees: Every provider will charge you for the transfer in one way or another. Let’s take a look at some figures:
The Commonwealth Bank of Australia charges $22 per online transfer and $30 per branch transfer. There is an additional receiving fee too – costing you up to $11. Further services, such as cancellation and tracking are around $25 each. (https://www.commbank.com.au/support/faqs/172.html)
Comparatively HSBC in the UK charges anywhere from £0 to £30, depending on your destination and loyalty status with the bank (“Premier” members receive a discount here). (http://www.hsbc.co.uk/1/2/international-money-transfer/details)
As you can see, there can be a fair amount of variation here. Every provider will give you their fee information upfront (if they don’t – avoid them!), so shop around and find something that suits your needs. A percentage fee may work out cheaper for small transfers, while a flat fee may be advantageous for those sending larger amounts.
Exchange Rate: The exchange rate determines the amount of foreign currency your local currency will convert into. This is set by each individual bank and therefore differs wildly.
HSBC offers a GBP/USD exchange rate of 1.52
The Commonwealth Bank of Australia offers a GBP/USD exchange rate of 1.49
This means that HSBC will give you 0.03 more USD per pound than the Commonwealth bank. Notice how the bank with the higher fee gives a slightly more favourable exchange rate? Often providers will “pad” their exchange rate to offer lower fees and vice versa – so you want to look at these two things together.
Transfer Time: HSBC will transfer anywhere in the world in up to four working days. More immediate countries, such as Australia, Canada and the US transfer on the same day that you apply.
Comparatively, The Commonwealth Bank takes up to five working days for transfer.
Similarly, Barclays offer a transfer time of up to eight working days, with faster priority for emergency transfers.
It’s important to factor these transfer times into your decision. Often faster transfers come with a higher fee.
Step Two: Get the Details from the Recipient
In order to make an international bank transfer, you’ll need some information from the recipient:
Bank Identifier Code (BIC) or SWIFT Code: This is a code used to identify banks around the world. Think of it like a unique ID number so that your money ends up in the right place. The recipient will need to acquire this from their bank and pass it on to you.
International Bank Account Number (IBAN): This is the bank account number of the recipient. It’s similar (and often the same) as their regular bank account number – but often with a little extra information. If you’re with Barclays for example, there is a tool available to help you find this. (http://www.barclays.co.uk/P1242593395280#). This information should be located on the website of any other major bank or should be present on your bank statement.
You will also need their name and physical address, but those should be reasonably easy to get hold of.
Step Three: To the Bank!
You have a choice here; you can either transfer money online or through a bank branch. It’s best to choose whatever you feel most comfortable with.
Branch: Use the phonebook or the bank’s website to find the closest physical branch. Ask the teller for an international bank transfer form to fill out. They will ask for the SWIFT/BIC/IBAN information, as well as the money you wish to transfer. From there, it’s simply a matter of waiting for the transfer to complete – which should take the amount of time specified on the bank’s website. It may pay to reconfirm the fees and exchange rate that you found earlier with the teller, just for peace of mind.
Online: Search for the international money transfer system through the bank’s website. Once you find this, follow the given instructions and input the required SWIFT/BIC/IBAN information. Select the currency and check the details very carefully. Depending on the bank, you may have to input debit/credit card details in order to conduct the transfer (although some banks will simply deduct this from your standard account).
Step Four: Patience is a Virtue
Now you just have to wait and co-ordinate with the recipient. Once they receive the money, you’re all done and dusted!
If you’re looking for a cheaper, faster alternative to bank transfers, OrbitRemit can help. We offer transactions for £5 or less and transfer within 1 – 2 working days. We offer generous exchange rates and a free transaction for the first and every tenth transaction you make. Check out our calculator on the top right hand side of the screen for more details!
- Posted by Jason on May 1, 2015 in Market
THE chance of parity between the Australian dollar and its Kiwi rival is fast dissipating, with the Reserve Bank of New Zealand signalling it may be preparing to cut rates.
The Australian dollar spiked to $NZ1.0515, up 0.8 per cent, in early trade on Thursday. Just last Tuesday, it was trading as low as $NZ1.0039.
It traded at $NZ104.89 in late trade on Thursday. However, a strong week-long rally in the price of iron ore and a weaker-than-expected inflation reading in New Zealand had seen the Aussie gain back ground.
On Thursday morning, the RBNZ left rates on hold at 3.5 per cent but in its statement shifted from a neutral bias to one of easing. “The bank expects to keep monetary policy stimulatory and is not currently considering any increase in interest rates,” RBNZ governor Graeme Wheeler said, adding, “It would be appropriate to lower the OCR [official cash rate] if demand weakens and wage and price-setting outcomes settle at levels lower than is consistent with the inflation target.”
But NAB senior economist David de Garis said the New Zealand dollar’s reaction was a knee-jerk response to the RBNZ continuing to say that the Kiwi currency is overvalued and that they’d need more evidence before they could ease. “Even so, the easing bias is still there, as it was in RBNZ’s McDermott’s recent speech, and has been latched on by the flightless bird that’s softened.”
The head of Asia-Pacific research at TD Securities, Annette Beacher, said she expects the RBNZ to stay on hold for some time as data would need to disappoint to force a cut.
“Perhaps today’s dove-ish bias is merely another way of jawboning the currency lower as the USD remains stubbornly and unexpectedly weak.
“We expect the markets to shift towards a rate cut in June, keeping the New Zealand dollar and rates under pressure, and today’s market reaction will be welcomed by the RBNZ – if not by us,” Ms Beacher said.
- Posted by Tom on April 30, 2015 in Market
Buying currency online is just like buying anything else, but it can sometimes seem confusing and difficult. To help you navigate the deep, dark world of currency exchange, we’re going to take you through a comprehensive “buyer’s guide” to foreign currency.
Basic Things to Know Before You Buy Currency Online – Understanding the Terms
A regular purchase usually involves picking out something you like and paying the amount designated on the price tag. Buying currency works in a similar way, except the “price tag” is often hidden through the combination of a padded exchange rate and an additional fee. This makes it difficult to gauge exactly how much you’re paying when you buy Pounds, Euros or Rupees online. On top of this, sellers will often use confusing terminology to complicate things for you.
Let’s take a look at some of these terms – you’ll want to be familiar with them so that you can understand the market and track down good deals:
Sell Rate: This is the rate at which the seller will exchange your local currency for foreign currency. For example, if you’re travelling to the UK, this is the amount of Pounds you would get for your Dollar, Rupee or Euro.
Buy Rate: This is the rate at which the seller will buy foreign currency back in exchange for local currency. This is the amount of Dollars, Rupees or Euros you’d get when you come back from the UK with some Pounds left over.
Spread: Notice that Buy and Sell rates are different for the same currency? While this money may seem like “no man’s land”, this difference is called the spread (and it’s where the seller makes a good chunk of their money). Keep an eye on this spread – if it looks small, you may be charged fees elsewhere to compensate – but if it’s very large, the exchange provider may be significantly padding their rates for bigger profits.
Forward Rate: This is an exchange contract to be completed in the future, with a set rate today. For example, I may choose to set up a contract to buy NZD $10,000 for AUD $10,000 in six months’ time from a seller. In six months, even if the market price is higher or lower, the agreed rate still applies. These aren’t often used by individuals – they’re more for businesses that want to minimise currency fluctuation risk.
Commission or Fees: This is an additional charge that sellers may have when exchanging currency. Be wary of this – it can come as a percentage or a flat fee – or even both!
Ensuring That You Get a Good Deal
The most effective way to keep peace of mind when buying foreign currency is to shop around. Vendors will offer consistently changing exchange rates (sometimes more than once a day). You can compare the rates of different sellers through the common calculator tools found on their websites. Make sure to add any potential fees onto whatever figure this calculator gives you though – as some sellers fail to mention them until it’s too late.
While loyalty pays off in many areas, foreign exchange often isn’t always one of them. Don’t be afraid to use different providers for better rates. Your bank may give a good deal when you buy Euros online today, but Western Union may give a better deal on Pounds. Tomorrow may be a different story entirely. Shop around frequently, particularly when exchanging large amounts, as a slightly higher exchange rate can make a big difference when multiplied by each dollar.
At OrbitRemit our service includes a built in loyalty program (your first and every tenth transaction is free with us) which brings down the cost of money exchange over the long run, especially if you’re sending money overseas on a regular basis.
Common Issues and Challenges
If you’re travelling, make sure that you plan your currency needs in advance. Small, frequent, one off exchanges overseas can come at the price of high fees and poor exchange rates. While it’s certainly an option if you get desperate, try not to rely on it. Convenient money is (usually) expensive money. If you’re not able to buy online, try to stick to big cities to exchange your cash – competition between providers means you’re more likely to get a good rate than in small towns.
While credit cards are a convenient way to transfer between currencies, they often come with nasty fees (sometimes as much as 3% of your overall transaction) and high interest rates. For example in New Zealand, Westpac charges a 1.5% fee, on top of a 1% Visa/Mastercard fee when withdrawing money at an overseas ATM. A further NZD $8 fee applies when using a debit card. These fees add up pretty quickly – and you can usually get better deals through online providers (by comparison, OrbitRemit offers a flat exchange fee of NZD $0 – $8).
If the exchange rate looks too good to be true, it probably is. Sellers that charge a high fee often give attractive exchange rates, and vice versa. Read every little bit of fine print before you commit to anything. Make particular note of the transfer time also – some providers will appear to charge a reasonable fee and exchange rate, but take a week to exchange the funds. Other providers, such as Paypal, will transfer instantly, but charge a much higher rate.
It’s a good idea to stick to well known, reputable providers to ensure that your money is safe from fraudulent vendors. A good exchange rate and a low fee is irrelevant if the money doesn’t come back to you.
Speaking of which, OrbitRemit can offer you low cost transfers between many countries with modest exchange rates. Check out our calculator on the top right hand side of the screen to see us in action.
- Posted by Lauren on April 28, 2015 in Market
When comparing the AUD to the Rupee regularly, you may notice some occasional swings in value. In fact, the Rupee seems to be slowly gaining on the AUD for now. But what’s behind these swings? We’re going to take you through the top three forces driving the AUD to Rupee exchange rate, as well as some current factors and predictions for the future based on these forces.
#1 – Interest Rates and the Reserve Bank – Changing Demand for Currency
When you go the bank and deposit your money or take out a loan, you’ll be dealing with an interest rate. This is both the amount of money you earn for having savings and the amount of money you have to pay to borrow (in other words, the cost of borrowing). But this rate isn’t the same in every country. Nor is it the same at every point in time. It’s dynamic and can change on a monthly basis.
One of the ways in which the interest rate is changed, is through the Official Cash Rate, Bank Rate or Discount Rate (the name will differ, depending on what country you’re in, but they all mean essentially the same thing). Think of this like the price that commercialbanks have to pay in order to borrow money from the bank of banks – the Reserve Bank. This rate is then passed on to the consumer – so changing the Cash Rate affects the interest rate. This rate is changed consistently to balance low inflation and economic growth targets.
The Reserve Bank of India currently their Cash Rate set at around 8.5%, while the Reserve Bank of Australia currently has theirs set at 2.25%.
But why is this relevant? After all, this doesn’t change the currency, does it?
Ah, but it does. High interest rates attract foreign investors, who are looking for strong returns on their savings. This changes the demand for currency which, based on the laws of supply and demand, changes the price of the currency. This is a factor driving the AUD and Rupee exchange rate. High interest rates in India cause increased demand for the Rupee, increasing its value against the AUD. Conversely, Australia is potentially looking to cut their interest rates to stimulate borrowing (to create growth), which will potentially cause the AUD to depreciate further against the Rupee in future.
#2 – Inflation and Political Stability
Inflation is the measure of general price rise over a period of time. While this sounds harmless, it can be quite dangerous in the realm of investing. As general prices rise any money you’ve saved away will buy you less. In other words, inflation erodes the value of money over time. For this reason, people fear inflation and seek countries with low inflation as a “safe haven” to deposit their funds. As India Currently has relatively high inflation (around 5.5 – 8.5%), this slows the demand for Rupees. Alternatively, Australia (due to low oil prices) is facing relatively low inflation (approximately 1.3%), creating investor confidence and increasing the demand for the AUD while the Rupee falls.
Political stability changes investor confidence, which affects currency price. Many investors are intimidated by the fact that India currently faces corruption within the government and stark inequality. This political instability could lead to turmoil which could jeopardise an investor’s investment. This causes the Indian currency to depreciate against the AUD, as Australia is somewhat more politically stable.
#3 – Exports and Imports (The Balance of Trade)
If I want to buy iron ore from Australia, I need to pay the seller in their local currency – Australian dollars. If everyone wants to buy iron ore from Australia, everyone needs to pay the seller in Australian dollars. This pushes the demand, and the price for the AUD up compared to other currencies (such as the Rupee). Therefore a rise in exports leads to an appreciation in currency value.
Imports act in the opposite way – increasing the supply of a currency and increasing the demand for another currency. This causes the local currency to drop relative to the exporting country. Every country has what’s called a “balance of payments”, which is a record of economic transactions between countries. If more money is going out than coming into a country, the corresponding currency will likely fall as a result.
Unfortunately, due to China’s current economic slowdown, hardly anyone wants to buy iron ore from Australia or India– causing the currency to adjust accordingly. This effect is increased by falling oil prices (as oil is one of India’s largest exports).
India and Australia are currently looking into a free trade agreement – allowing goods to flow from both countries to the other without any additional taxes, tariffs (additional price increases) or import quotas. This would likely increase exports between the two countries and even out import/export disparities. The currency would likely remain somewhat more stable as a result.
If you’re looking to send money from India or Australia, you’ll want to watch the Australian Dollar exchange rate – after all, this will determine exactly how much you’ll come out with on the other side. OrbitRemit offers low cost, attractive exchange rate transfers between India and Australia. Check out our calculator on the top right hand side of the screen to work out exactly how much will come out on the other side!
- Posted by Paul on April 27, 2015 in Market
If you’re Filipino and planning to work overseas (or you’re working overseas already, but you’re wondering about other job options) it pays to do a little research to determine which skills will give you the best chance of securing a high-paying, enjoyable job. In this post we’re going to take you through the 5 most popular jobs for overseas Filipino workers.
#1 – Healthcare and Nursing
Many Filipinos are successfully finding work abroad as nurses and caregivers in the healthcare arena. This is a sensible decision. After all, the healthcare industry grows perfectly alongside the population. Many developed countries, including the United States and New Zealand, have a current shortage of nurses and chances of getting a job are therefore quite high for someone with the right skills.
This demand for skilled workers will only increase as the “baby boomer generation” begins to age and retire, requiring more extensive healthcare. Keep in mind that nurses are also required in times of disaster. At the higher end nurses can earn around $70,000 NZD/AUD annually, particularly with experience.
Canada keeps its door open for Filipino nurses also, particularly if you’re well trained. Other countries also accept Filipino workers in the healthcare sector, such as Japan, however you’ll have to pass extensive exams and ensure you’re capable of communicating clearly in Japanese.
Every country has its own set of requirements, so you’ll have to make sure to research these on an individual basis. New Zealand requires a Master’s degree in Nursing or Health Science and many hours of on the job training – so make sure you’re prepared! It may well cost you to acquire these qualifications too, so just be careful.
- Posted by Hieu on March 23, 2015 in Financial Tips
It’s no secret that sending money online can be risky. Many fraudsters and scam artists make a living from conning online victims out of their hard earned money. The best way to make sure you’re performing safe money transfers is to teach yourself to spot these scams. We’re going to take a look at some of the most common Paypal and Western Union scams around, and teach you how to avoid them.
Different Paypal and Western Union Scams – What You Should Do if You Suspect Something
Overpayment is a common Western Union scam. This involves a buyer of an item sending the victim seller a cheque for a higher amount than the agreed sale price. The buyer then expects the seller to refund the difference via Western Union, however the original cheque does not cash – leaving the seller with no payment for the goods, and having refunded the excess from the cheque.
Lesson: If anyone claims to have “overpaid” you, make sure that the cheque is accepted by your bank before refunding the difference.
Emergency! Is another common scam. The victim receives an email from a supposed relative or someone who needs help, such as a grandparent who has been hospitalised or a Nigerian prince who is attempting to retrieve his fortune. The email asks the victim to send money, often with the promise of a return, to a Western Union or Paypal account. The email is fraudulent and the scammer then keeps the payment.
Lesson: Very rarely will someone ask you for money via email, particularly from an unknown address. If your father really had been arrested, or your grandfather needs money for an urgent operation, you will be contacted in some other way (i.e. the phone or face to face). Never accept any request for money from an unknown email address.
Phishing is also very common. This involves a scammer sending a fake email and pretending to be Paypal. It asks the victim for their log in details, which are recorded by the scammer and used to steal money. These emails may also have malicious attachments, such as a virus or keylogger, which can be used to record the details you enter into your computer – in other words, your passwords.
Lesson: Most websites are now aware of the phishing scam and will never directly ask for user details via email. Navigate to the website with your web browser – rather than clicking a link contained in the email (which may take you to a fake website) to resolve any issues you have with an online account. A good spam filter on your email inbox should also reduce the likelihood of receiving a phishing email.
Fake online purchases are somewhat common in the world of online shopping. This involves the victim winning an online auction or purchasing something through a website. The victim then pays for the item via Western Union or Paypal but never receives it.
Lesson: Make sure to check that you’re buying from a reputable website or EBAY seller. EBAY, in particular, has a feedback system, so that you can look at the seller’s previous history – which should give you an idea of whether or not you’ll receive your item. Newer traders or sellers with poor history should be avoided if possible.
Also, many shopping websites can be Googled in order to check their validity. If you get a dozen results from people who never received their purchases, alarm bells should be ringing in your head.
If you need to transfer money overseas online safely, try OrbitRemit – we’re dedicated to informing the population of remittance fraud. We offer generous exchange rates and low fees. Check out our calculator on the top right hand side of the screen to find out more!