 You may be wondering why we stress the value of being able to choose when you convert your Pounds Sterling to New Zealand Dollars – well, it can make a really big difference to the amount of Dollars you will get for your Pounds. And, whether you are transferring a pension fund, an inheritance, your life savings or your home equity, the more dollars you get the better.
This graph shows the Pound to Dollar exchange rate over the five years from November 2002 to November 2007: 
(These are the average daily Interbank or wholesale rates – there would have been further variation within each day’s trading, and you would get a slightly different rate as an individual using a foreign exchange service). If you changed £100,000 at the best possible rate over this period, you would get around $322,000. At the lowest rate, you would have received around $242,000 – an $80,000 difference. Looking over a shorter time-frame, the difference can still be significant. The graph below illustrates the average daily Interbank exchange rate for the three months from July to September 2007:  daily average Interbank pound to dollar exchange rate from July to Sept 2007
If you changed your £100,000 on the best possible day over this period, you would have received around $294,000 – on the worst day, it would have been around $255,000, a difference of just under $40,000. So how do you know when the rate is at its peak?Fluctuations on the currency markets are hard for the experts to predict, and it is impossible to know with any certainty when the exchange rate has peaked or bottomed out. The general trend New Zealand Dollar is that it “goes up the escalator and down the stairs” – it climbs quite quickly then drops back down relatively slowly. This is illustrated quite well in the five-year graph above. But past trends are no real indicator of future performance – so how will you know when you have the “best” rate for your currency conversion? The short answer is you won’t know – but with the help of a specialist foreign exchange dealer, you can make an educated guess. And they can help you to use strategies such as limit orders to “set” a rate and have your money changed automatically if (and when) the rate is reached. This could save you time as well as money. And remember that you do not have to change all of your money at once - you can change as much as you wish to initially, then change the rest in increments. This does not necessarily complicate your tax position (as a resident or non-resident) in the UK, as we have access to investments that allow you to hold your pension funds or savings in Pounds outside the UK while earning a competitive rate of interest. So please contact us to talk about your options.
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