When it comes to sending money abroad, exchange rates play a key role in the process. However, exchange rates are often misunderstood, frequently overlooked and under-researched.
This can be a costly mistake. Whenever you send money abroad to loved ones, exchange rates directly affect the total cost of your financial gift.
At uLink, we want to make exchange rates as clear as possible so you can be a more educated consumer. We also want to help you avoid paying more than you should when you send money home.
Starting with key definitions, a quick overview of “forex,” and an overview of the uLink app, here’s everything you need to know about exchange rates:
What Are Exchange Rates?
Let’s start by examining the global economy and the many currencies at play. Currently, there are 180 active currencies around the world, as recognized by the United Nations.
Think of these currencies as individual languages. In order for foreign nations to communicate financially with one another (and in order to trade their goods), a mutual translator is needed to ensure both parties are on the same page.
That’s where exchange rates come into play. So, what do they do?
Exchange rates show the value of one currency as compared to another.
For example, let’s use the American dollar (USD) and the Mexican peso (MXN). On April 26, 2021, the exchange rate between those two currencies was 19.8110. In other words, on April 26th, it took USD $1 to buy MXN $19.8110.
As with all exchange rates, however, a currency’s value is constantly in flux.
In fact, just four days later on April 30, 2021, USD $1 was worth MXN $20.2430. Economists might refer to the “strength” of the dollar on that particular day, since it yielded slightly more pesos than earlier in the week.
While these minor numerical shifts may seem insignificant, they can quickly add up on larger purchases or money transfers. In fact, every time you buy an item from an international vendor or swipe your credit card at a shop overseas, you’ll trigger exchange rate fees from your bank.
Whenever you require a conversion of currencies, you complete what’s known as a “forex” transaction. That’s short for “foreign exchange” or “FX,” as it’s often referred to on Wall Street.
In fact, the forex exchange market is bigger than the stock market and bond market combined, accounting for over $6.6 trillion in daily trading in 2019.
Why Do Exchange Rates Change?
Exchange rates are extremely volatile. While the stock market takes the weekend off (and closes at 4 PM EST on Friday afternoons), the foreign exchange market never sleeps.
Therefore, the value of currencies changes by the second.
International currency rates are at the mercy of myriad factors including consumer confidence, political unrest, inflation, international trade relations, interest rates and more.
During the height of the COVID-19 pandemic, for example, countries with rising case numbers often saw the value of their currencies weaken.
Not all countries have fluctuating exchange rates, however. While many of the world’s largest economies have “fully convertible” currencies, other nations operate a bit differently.
Some countries (like Cuba and Iran) have “restricted” currencies, and others “peg” their currencies to more stable economies. This is often done to avoid the sudden rise and fall of a currency’s value.
For example, most Caribbean islands are so enriched by U.S. tourism that they “fix” their currency to the American dollar in the hopes of maintaining equilibrium.
Exchange Rates & Mobile Payments
Ultimately, sending money abroad can often be burdened with unfair exchange rates. In addition to charging a percentage of the total transaction, most banks will often set their exchange rates far above the market.
This sadly results in one thing: spending more to send less money home.
At uLink, we’re driven to help you save money and make the most of your financial gifts. While we don’t have the power to stop currencies from changing, we believe it’s essential that you have fair and accurate market information before beginning a transaction.
We pride ourselves on delivering great exchange rates.
Through the course of last year, uLink ranked as the #1 option for Money Transfers to Mexico and was recognized for offering customers the better value for their money transfers to Mexico in the “Who is Who in Remittances to Mexico” (QQED) program by Mexico’s Consumer Protection Bureau Agency (PROFECO). In 2021, uLink continues its trend by ranking #1 for best value money transfers to Mexico. Not just that, uLink was also recognized by the President of Mexico as the best provider in 2020 during the National Banking Convention in March, 2021.
The uLink Remit App and web platform reflect our commitment to you. Whenever you visit uLink, you’ll immediately be able to view the daily exchange rate for the country that you’re sending money to.
Once you’re logged in, each of your transactions will always display a detailed fee breakdown, so you’ll always know exactly what you’re paying before you send money, pay bills, or reload phones abroad.
No secrets, no unnecessary fees, and fair exchange rates: that’s our promise to you.
Plus, we hold regular FX Flash Sales to select countries so you are able to support your loved ones abroad with the peace of mind knowing that you’re getting more for the money you send home. Follow us on Facebook or Instagram to stay updated on our Flash Sales.
Sending Money with uLink
With uLink, you can skip the long wait times and hidden fees and send money home fast. Thanks to our global network, you can send money to over 143,000 locations in 51 countries. And with our great exchange rates and fees starting as low as $0, you can send more money home than ever before.
Plus, after your 1st, 2nd, and 5th transactions, we’ll send you a $10 gift card to use at your favorite retailers. That’s $30 in gift cards after your first five transactions with uLink.
Miles from home — just moments away with uLink.