There are many reasons to benefit from saving in a foreign currency. For example, at Sasfin, we have clients who are emigrating and want to avoid currency risks. It’s also very difficult – if not impossible – to open a bank account overseas.
Similarly, grandparents want to send gifts to their families overseas, or parents are saving up to send their children to school or university abroad. We haven’t seen much international travel over the past 18 months, but saving up for a holiday is also typically when the ability to save in a foreign currency is extremely beneficial.
This is what a Foreign Currency Account (FCA) achieves. It is not an investment tool, but rather a savings tool that gives you peace of mind that when you need your foreign currency, you know exactly how much you have saved because it is not subject to a fluctuating rand or volatile exchange rates.
Smoothing out fluctuations in the rand
When you save in US dollars, the Pound Sterling, or one of eight currencies Sasfin currently offers, your savings are designated in that currency and not your home currency. They are also subject to the exchange rate at the time of your deposit. If the rand fluctuates, it does not alter the foreign currency you hold in your FCA.
However, the key to successfully saving foreign currency in an FCA is consistency. Steadily saving each month with a direct deposit allows you to benefit from surges in the rand and protect yourself when the rand depreciates. This consistency smooths out currency risk through the course of the year, and of course, when the rand is particularly strong, you can capitalise by moving more than your usual amount into your FCA as well.
A simple, short-term savings vehicle
Thinking of an FCA as a temporary short-term savings vehicle gives you the freedom to put foreign currency aside without worrying about when you can exchange funds based on an imminent trip or if the exchange rate will suddenly dip as you are moving your assets overseas.
It’s also a very simple process. You can make payments overseas in your nominated currency, or if you are ready to withdraw your funds because you have emigrated and have been able to open a bank account in your new place of residence, you can simply fill out a BOB form to enable a telegraphic transfer, pay R350 for the SWIFT fee and transfer your dollars or pounds from your FCA to a third party elsewhere in the world. In addition, anyone can open a Sasfin forex account – you do not need to be a Sasfin client.
Getting started
At Sasfin, we currently offer 8 different currencies through our FCA account, the most popular of which are the British Sterling, the Euro, US Dollar and Australian Dollar.
When you want to make a deposit or withdraw from your FCA, simply send an e-mail to your Customer Relationship Consultant.
If you are not already a customer of Sasfin, you can email info@sasfin.com and start saving today!
