What Brexit Means for Doing Business Across the Pond

What is Brexit? 

Brexit means Britain’s exit.

Actually, Britain was formerly a member of European Union (EU), a politico-economic union of 28 member states that are located in Europe, prominent member countries of which are, France, Italy Germany, Sweden and so on, of which Britain(UK) was also one of them. On June 23, 2016 by a referendum people of UK opted to exit itself from the EU and Brexit is the modern nomenclature gifted by the social medias from around the globe for this exit. The expanded form entails Britain’s exit. 

Why Brexit? 

UK has been one of a prominent member of the EU. It is the second contributor after Germany(20%) to the EU’s GDP giving in every fiscal a 17% of contribution. France 14%. Italy 11%. UK has always been so open among the other countries. Liberalization was at its peak, but however to majority Of Britishers such liberalization seemed a harm to the nation. Issues ranging from job to immigration to education made them worried. So, as a result they decided to move out of the union. 

Pros and Cons of Brexit 

Pros:

  1. Free International trade: Leaving the EU, Britain will be able to independently access the international trade deals.
  2. No membership cost: You no longer have to pay for EU membership fee
  3. No more EU trade regulations costs: Exit from EU will allow Britain to set its own regulations for the members.
  4. Reduced red tapes: Reduced policies have enabled firms to increase their productivity potential.
  5. Lower Costs: Lower supermarket costs reduced barriers to customs and tariffs and other trade costs.
  6. Control immigration: The UK government will be able to control and regulate the immigration of individual in its member state.
  7. Security: The new immigration laws will make it difficult for a terrorist to enter the UK and also make it easier for the UK to deport violent criminals.
  8. Independent: Britain will have a chance to influence world decisions as an independent nation.
  9. Better Employment: Increased wages and job creation. Exit from EU will lead to fewer regulations in the workplace environment.
  10. Opportunity for Companies: Britain companies will no longer have the mandate to follow the strict laws set by the EU.

Cons:

  1. Loss in Business: Membership to EU will make Britain attractive for foreign investment and exit from EU, they will lose 45% and 50% of UK’s Export and import.
  2. No Free Trade Negotiations: Britain will not take part in the world largest free trade negotiations between EU and the US.
  3. Loss of influence: Leaving the EU will limit Britain’s opportunity to take part in EU’s decisions concerning world affairs or in setting European laws.
  4. Barriers to EU workers: With the implementation of Brexit, there will be a skills gap in the market because of the barriers put in the workplace.
  5. Impacts on the economy: Leaving EU has an impact on the economy, businesses and individuals will have a hard time raising funds for any developments.
  6. Increase Energy Bills: EU negotiates for energy bills for its member state, leaving EU will increase energy bills for Britain.
  7. Less Educational Funds: EU offers support funds to a lot of educational programs in the UK. Exiting EU will have an impact on students since the Britain government regulates the costs for EU students.
  8. Less Educated Manpower: Controlling immigration by Britain will affect its economy and the society at large.
  9. Reduced investment fee: Most of the jobs in the UK are due to trade with the EU making the UK receive an investment of £66 from the EU jobs.
  10. More Policy in Ground: Exiting from EU, Britain will have the responsibility of setting policies to protect human consumption.

What is the global impact?

  1. UK has been a very open country to the other countries across the globe. It has significant business and trade connections all over the world. It has gathered so much of strengths with its association with the EU over the past decades, which it held a strong grip on the world economy. After the exit it now can be said the nation now holds a lesser grip than before. This may likely cause a degeneration of the trust worthiness among the global traders towards the nation. 
  2. Exporting to UK and importing to UK will now not be a piece of cake. Stringent policies and strict regulations are now awaiting the roads.

For existing investors, they probably gonna see a scenario where all the global investor withdrawing their investment from UK and Europe, at least for the time being now thus resulting crash of stocks in the international market inviting the Pounds to play at low level. To obtain the same value of goods and services as they were taking before resulting more outflow of GBP thus causing a loss to them. 

Also, new investors may get profit even after the Brexit.

China’s slowing economy and how it affects you

When the second largest economy in the world, China’s, takes a hit, so does the stock market. And the country is facing even more problems with ongoing trade war with the U.S. China’s economy faltered last month among industry and consumers, according to the Wall Street Journal. The double-headed whammy saw the slowest industry production since 2016 and retail sales growth hitting a 15-year low.

China’s economic growth was the world’s economic success story – until Black Monday, July 16, 2018 when its markets crashed. Today, China’s economic growth is half what it was in the starting of the year 2018.

Reasons for slowing economy of China

The fact is, China’s slowdown was inevitable – for some reasons

  1. First, China’s economy has long been built on its manufacturing sector. Being the factory of the world is easy when you have a huge and growing population – harder when your one-child policy slows growth, ages your population, and creates a generation unwilling to accept the low-paid jobs of their ancestors.China’s government is trying to move from a manufacturing and export-driven economy to a service and domestically-driven one. So exports are declining after decades of 20 percent annual growth – a huge part of China’s latest slump.
  2. Second is China’s response to the 2008 financial crisis. The government spent $586bn to stimulate the economy. This worked in the short-term: bolstering industry and commerce. But it left a legacy of debt and dozens of ghost cities – bad assets doing nothing to sustain that first burst of growth.In 2014 China aggressively cut the cost of borrowing. Again, this stimulated the economy briefly – especially at a local level. But householders are now servicing unsustainable debt instead of spending in the real economy.
  3. The third reason is that – simply enough – China is transitioning from a developing to a developed economy. Growth rates of 10 percent a year just don’t happen in developed economies.2016 does promise weaker Chinese growth. But the country’s economy is still growing at 4.3 percent. Most of the developed world would give anything for that growth rate.Services are on the rise. Rail, technology, alterative energy, education, media and entertainment are leading the way.

Some more reasons of China’s slow economy

  1. Accelerating Credit Growth
  2. Overvalued Currency
  3. Frothy Real Estate Market
  4. Overheated Property market
  5. Chinese exports are tumbling
  6. A transition to consumption-based economy, and a rise in household debt

Effects of China’s slow economy

  1. China’s economic slowdown would impact different regions of the world in different ways depending on their exposure. In countries dependent on commodity exports, like Australia, Brazil, Canada, and Indonesia, the slowdown could have a negative impact on their GDP growth as demand slows. The inevitable fall in commodity prices could be beneficial, however, for other countries that consume the commodities, such as the United States and countries across Europe.
  2. The country has been the single largest contributor to global economic growth over the past several years, according to the IMF, contributing 31 percent on average between 2010 and 2013. These figures are significantly higher than its eight percent contribution in the 1980s, but some economists argue that the U.S. and Europe could pick up much of the slack as the global economy rebounds from the 2008 financial crisis.
  3. The United States buys about 20 per cent of China’s exports. Sellers of low-margin goods such as surgical gloves and handbags say American customers are canceling orders. But producers of higher-technology goods such as factory machinery and medical equipment report little impact.

Bottom Line

China’s economic situation is difficult to assess. While China has made steps toward a more transparent financial sector, there is still a tradition of cooking the books. Chinese stocks typically sell at discounts of at least 10 to 20% of their American counterparts, and this implies that China’s economy is under performing compared to government reports. Analysts question to what extent the data are being manipulated.

Important trends that investors should keep a close eye on over time:

  1. Reduce Commodity Exposure
  2. Increase Diversification
  3. Hedge with Puts on Chinese ETFs

Well, China is still the world’s second largest economy. Anything China does causes huge economic waves. 

But as China shifts from an export-led economy to one more domestically driven, its impact on other countries should drop. China’s role as the vacuum of the world’s commodities will continue to recede. And as domestic consumption increases, China’s massive population will become an even more lucrative marketplace for sales and services. 

China may no longer dazzle the world with its burgeoning economy, but slower, domestic-led growth will be a lot more sustainable.

 

References:

http://fortune.com/

https://www.nytimes.com

https://www.worldfinance.com

https://www.thebalance.com

https://www.investopedia.com/

5 tips for finding best exchange rates

Getting best exchange rate is the first thing on any ones mind when sending money to friends or family abroad. Better the rate larger the sum you care about gets. But how can you get higher exchange rate while sending money overseas? You don’t need to be pro to get the best rate, you just need my 5 tips.

Before we get to finding best exchange rate let’s discuss what is exchange rate and how it is decided.

What is an “Exchange Rate“?

In simple terms exchange rate is a price of one currency in another currency. In other terms the price at which you exchanged the currency for the other one is known as exchange rate.

How is exchange rate decided?

There are multiple factors driving currency rates like market situation, foreign policies, country’s financial stability etc, but like any other commodity core of it is supply and demand. Higher the demand and short the supply, higher the value of a currency. When you exchange currency you are basically trading your currency for the other one. When there is good demand for the currency you are selling, higher the rate you get.

How to get best exchange Rate?

Getting best rates is not a rocket science anymore. You need to know what to look for when you are trading your currency. Without further delay here are my 5 tips to get best bang buck, 

1. Use online tools to compare exchange rates

There are few good exchange rate comparison sites available which do the hard work finding and comparing exchange rates offered by vendors in the market. My recommendation is to use ExchangeRateIQ.com who provide the most accurate and reliable rate comparison offered by vendors along with other key details you must consider while transferring money. Just enter your search criteria and ExchangeRateIQ.com will list the best available rate top of the all available offers. 

 2. Find exchanges who offer the transfer with higher rate but no fees

Yes, there are many exchanges out there who charge nothing for foreign currency exchange. Why do they offer you free transfer? e.g. Transfast, Remit Money, Remitly, Placid Many of them make profit by pooling money and selling currency when market is favorable. There are some vendors who charge fees per transfer but offer slightly higher exchange rate.

3. Always consider realized exchange rate

Realized exchange rate is a true rate you get after paying fees and other charges for transfer. Fees applied could be money transfer fees by exchange, cash advance fee charged by credit card, wire transfer fee etc. So before you decide to transfer make sure you consider all charges and find the exchange who offer you the best rate with your transfer criteria.

Let me give you an example. Consider you are transferring $2000 from USA to India from your bank account and below are two results you see,

As you may notice offered exchange rate is higher by Vendor 2, 69.45 INR / USD but as Vendor 2 is charging fee of $4.99 realized exchange rate is lower than Vendor 1. In this example you are better off exchanging money with Vendor 1. 

4. Lock in your exchange rate

Look for vendor who is locking in the exchange rate until transaction is completed. Dont get caught in market fluctuation and loose money. Once again ExchangeRateIQ.com make is simple for you to pick by showing the fixed or locked in rate.

Fixed vs Indicative exchange rate

5. Send one large transfer rather than several smaller transfers

Some of us like transfer to be scheduled or periodic. If you transfer money periodically try cutting down the frequency and send large amount of money with each transfer. E.g. If you send $2000 per month try sending $4000 every other month. Larger the sum better the rate you get. Many money transfer companies offer higher exchange rates and lower fees for large money transfers. Also there are exchanges like Venstar Exchange who only offer large sum transfers and with whom one can negotiate for the rate by calling them.

Even though large transfers provide better rates you might have to consider tax regulations and foreign transfer policies before making a large transfer.

Beside exchange rate there are other factors you should consider when sending money oversees such as how soon money will be delivered? how your beneficiary will get the money? is money transfer for saving or payments? Is your final option is the best option for sending money? There are many things need to think of. Look for tips on these in upcoming articles.

7 things you must know before you do wire transfer

Wire-Transfer-demystified

7 things you must know before you do wire transfer

If someone is asking you for a wire transfer or just wondering what wire transfer is here are 7 things you must know before you do wire transfers.

1. What is wire transfer

Wire transfer is a way of transferring money electronically. Wire transfers were started by Western Union in 1872 and used telegraph wired network hence the term wire transfer (though it was known as Telegraph transfer). Even though wire transfers are generally conducted between financial institutions (let’s refer them as bank in this article for simplicity) neither sender nor receiver is required to have bank account. Having bank account improves customer experience and speed of transaction.

2. How does wire transfer work

In essence wire transfer is a simple process.Wire transfer process

  • Sender submits the wire transfer instruction to the bank with details of an individual or organization funding the transfer, bank details to fund the transfer from, recipient and financial institution details where funds will be withdrawn from. More details on this later.
  • The sending bank sends a secure message with settlement instructions to the recipient bank.
  • The recipient bank verifies identity of the beneficiary and release funds.

3. What information is needed for wire transfer?

At minimum following information is needed,

  • Sender name and address
  • Source of funding – account number, cash etc.
  • Beneficiary name and address
  • Amount
  • Purpose of transfer

Generally bank routing number and beneficiary account number is sufficient for domestic wire but international wire requires following additional detail,

  • Internationally recognizable bank account number such as IBAN (International Bank Account Number) or CLABE (Clave Bancaria Estandarizada, i.e. Standardized bank code for Mexican banks)
  • Recipient bank SWIFT/BIC or IFSC or IRC code depending on recipient country
  • Currency funds will be withdrawn in

Please note that information you provide about sender and receiver may be used for identifying and preventing illegal activity such as money laundering, terrorist funding etc.

Lookup swift codes with Transferwise here.

Lookup IFSC codes here.

4. How much does the wire transfer cost

It is important to know that both sender and receiver pays for the wire transfer.

  • Sending wire cost between $30 and $45
  • Receiving wire cost between $10 and $15. In some cases this fee could be waived by beneficiary financial institution.

In addition you’ll be charged by credit card company if you are using credit card for wire transfer. If wiring international and beneficiary is expected to receive funds in local currency you must consider exchange rate offer by the bank. Before you wire check current exchange rates on https://exchangerateiq.com to ensure your financial institution is providing comparable or better exchange rate.

5. Is it safe to wire money?

is wire transfer safe

Yes, wire transfers are safe. Banks are required to use secured communication channel for transfer. Wire transfer guarantees fund will be delivered to beneficiary but verifying if beneficiary is legit or a thug is your responsibility.

 

6. How fast is wire transfer?

  • Domestic wire transfers take few hours.
  • International wire transfers take a day or two.

Even though domestic wire transfer in same bank is instantaneous it should be used for high value transfer only. Account to account transfers without wire transfer are available free of charge at most banks with same security and speed.

7. Can wire transfer be reversed?

It is technically possible to reverse wire transfer as long as recipient bank has not released funds to the beneficiary. But wire transfer being electronic it is only possible if sender identifies the error and request banks to reverse transfer immediately. It is wise to double or triple check your wire transfer instructions for accuracy before submitting.

 

References:

Welcome to ExchangeRateIQ for iPhone

There are exciting changes happening in the ExchangeRateIQ world. Rate Alert and Android App are arguably the most exciting of them! ExchangeRateIQ will soon be used as a true guide for comparing money transfer.

Our biggest dream is “Be Visible to All the Users In Every Manner” and helping them in making decision for their money transfer. So after successful launch of our Android App, we tried to move another step forward and decided to launch an iOS App to reach iOS users as well.

So, We are very pleased to announce release of our iOS App that will help you discover the best way to send money across the globe.

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ExchangeRateIQ’s Review about WorldRemit

This week, we are finally publishing our full review of WorldRemit. WorldRemit is the money transfer company that everyone has heard about, at least those people who have sent money abroad in their life. WorldRemit’s service is available to senders in 50 countries. It offers transfers to more than 140+ destinations across Europe, Asia, Africa, Australia and the Americas.

Our mission at ExchangeRateIQ is to provide our users with accurate comparison information about money transfer providers, to help you make the right choice for each of your transaction. Also, our role is to provide as much information as possible on every money transfer company  to allow you to make your choice by considering all the factors including cost and speed.

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money-transfer-comparison-app

Introducing Money Transfer Comparison App

We’re extremely hAPPy to announce the launch of our Money Transfer Comparison App for Android to compare rates of all the major money transfer companies.

Moving abroad, away from your homeland can be exciting and challenging. It becomes a necessity to transfer money to your loved ones for a wedding, a medical expense or just to help with everyday expenses, especially if you can’t be there yourself.

Among so many options or ways to transfer money, it is extremely important to shop round for the best deal before you remit money and make sure that more of your hard-earned cash reaches your loved ones. Finding the cheapest provider can mean great savings.

So our solution in the form of Android App, is now available to you for free in Google Play Store.

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Demonetization in India – What can you do overseas?

On 8-Nov-2016, Govt. of India took a historic action to fight against black money, counterfeit currency and corruption and demonetized high denomination currency notes of 500 and 1000 Indian Rupee. The rule came in action without any prior intimation and from midnight on the announcement day, all these notes were banned for use other than for specified usage.

While this affected people in India to a great extent, the Indians residing abroad were also not unaffected. Whoever has cash money in denominations of 500 and 1000 INR now has to deposit them or get them exchanged.

In this blog, I’ll try to consolidate the actions the Indians residing overseas can take for demonetized notes in their possession.

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11 Tips & Tricks to Get The Best Value for Your Money Transfer

The remittance industry is growing exponentially year-on-year. The figures in world bank report say it all. In year 2015, a whooping $ 581.6 billion was transferred internationally. This amount is supposed to cross the mark of $ 610 billion in year 2016. Money transfer companies are making profit with this growth. In part 1 and part 2 of my blog series, I wrote about mid-market exchange rate and how money transfer companies offering you currency exchange at “0 fee” are still charging you indirect fee. In this part 3 blog, I’ll explain how you can outsmart their tricks and save more on your remittances.

So, here’s how you can get the Best Value for your international money transfers –

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The Myth of “0 Dollar Fee” on International Money Transfer

As we explained in part 1 of our blog, the money transfer companies offer an exchange rate from the bid-ask spread and not the mid-market exchange rate. Mid-market exchange rate is the most accurate foreign currency exchange rate but money transfer services and banks operate at the exchange rate margin. In this blog we will discuss about various remittance costs that we should be aware of when sending money from one country to another.

Think about this; in an ideal world while sending money you should be able to get the exact conversion rate. For example, if the mid market rate for 1 USD to INR is Rs 68.00, for sending 1000 dollar to India you should receive 68000 rupees. Well, as we all know that just doesn’t happen and you usually end up paying a cost for your remittances

You usually end up paying some cost for your money transfer from USA to India. This money transfer cost or the margin could vary depending on sending and receiving countries, currency pairs, modes of transfer and many other factors.

The exchange rate offered by money transfer companies are in most cases less than the actual mid-market rate and this could make a huge difference in the amount of remittance being received.

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