As South Africans, we’ve learnt to watch the strength of the Rand carefully. How are we performing against the US Dollar? Has the Rand strengthened or weakened? What international events are currently impacting the Rand?
For anyone planning an international trip, whose children will be attending school or university overseas, or for grandparents who send Christmas gifts overseas, these are important considerations – how strong will the Rand’s spending power be at any given moment?
Foreign Currency Accounts and making the most of your Rands
A Foreign Currency Account (FCA) is an account that denominates savings in a currency other than your home currency (in this case, the South African Rand).
The discipline of setting aside Rand savings each month and converting them into an FCA tends to smooth out currency risk through the course of the year. When the Rand is particularly strong, you can capitalise by moving more than your usual amount into your FCA as well, averaging out to improve your overall rate.
An FCA makes sense for individuals who:
Leveraging your Single Discretionary Allowance
One of the benefits of an FCA is that you can capitalise on your Single Discretionary Allowance. The South African Reserve Bank (SARB) and South African Revenue Service (SARS) allow a Single Discretionary Allowance (SDA) capped at R1 million per calendar year, per South African resident, which means you can spend R1 million abroad per year without having to apply for a Tax Compliance Status Pin Letter, which was previously called a Tax Clearance Certificate. With a Tax Compliance Status Pin Letter, you can invest a further R10-million every calendar year.
To avoid the rush in December, start making monthly purchases of foreign currency as soon as possible to help the family unit to budget and to get into a healthy saving habit. If you are working abroad and want to send your foreign salary home, our FCA is also a smart move.
No minimum balance required
The balance in your foreign currency account is considered a local investment. Many foreign currency accounts attract expensive account fees, but Sasfin Bank currently offers this service free to our customers and we require no minimum balance.
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 Client Relationship Consultant.
If you are not already a customer of Sasfin you can access the application form here and start saving for something fun today!