We’ve got them here: the tricks of the trade and how crew can maximise foreign income!
The currency market’s volatility can make your hard-earned salary in Euros (EUR) or US Dollars (USD) fluctuate significantly when converted to pounds. For instance, in 2023, a USD 60,000 salary could have varied between £45,500 and £50,850 due to GBP/USD exchange rate fluctuations… Check that out.
Step Into Paul’s Shoes…
To navigate this uncertainty, consider the case of Paul, a senior crew member earning USD 5,000 monthly. He uses an online currency conversion service to collect his USD salary and convert it to pounds when he is present in the UK.
Paul would normally make 3 equal conversions of USD 20,000 at the end of April, August and December respectively. The GBP/USD rates he would have achieved using on the day rates in 2023 would have been 1.26, 1.2750 and 1.2780. His resulting salary would have been £47,208.74. While using an online broker may seem convenient, Paul missed out on over £3000.
Strategise
By consulting an independent currency broker with a dedicated dealer, Paul was able to strategise effectively. The aim was the same; to make three equal trades of USD 20,000 to GBP by the end of April, August, and December, but with a minimum total of £48,000. Here’s what happened:
The GBP/USD rate at the start of January 2023 is around 1.21. With guidance from his dealer Paul decides to give the following instructions:
- Alert if the rate goes lower than 1.20
- Alert if the rate moves to 1.25
Getting informed
On 6th March 2023 Paul’s dealer informs him the GBP/USD rate has gone lower than 1.20, they agree a deal at 1.1850 which Paul can settle end of April. Outcome: £16,877.64
At the start of May they speak again. The GBP/USD rate has moved adversely to 1.2550 so they agree the following 2 instructions for trade no. 2:
- Firm limit order to automatically trade if 1.25 is achieved
- Alert if the rate moves to 1.2850 (to insure the target of £48,000 for the year.)
On 12th May 2023 Paul’s dealer informs him that the firm limit order has been achieved. Paul has sold USD 20,000 at GBP/USD 1.25 which he will settle at the end of August. Outcome £16,000.00
At the start of September they speak again. GBP/USD has settled back to around 1.26. Paul can now afford to be more ambitious due to the first 2 trades bringing him out ahead of target. They agree the following instructions:
- Alert if the rate moves to 1.22
- Firm stop loss order to automate a trade if the rate moves to 1.30 (this insures the minimum £48,000 target for the year is achieved.)
On 26th September Paul’s dealer informs him that the rate has moved below 1.22. They agree a deal at 1.2160 to be settled end of December. Outcome: £16,460.91.
The outcome
Paul has achieved a grand total of £49,338.55, a saving of £2,129.81. Even if the rates had moved further out of range, there was a strategy in place to deliver a minimum of £48,000 – more than Paul would have achieved on his own. This personalised approach not only helped Paul exceed his income target but also minimised risk and cost.
To learn more about the alerts and orders mentioned above and to discover further benefits of having your own personal currency dealer, speak to us today.
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