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How do you forecast exchange rates?

Getting competitive, best exchange rates can help save you a lot of money. Whether you are a tourist, expat, financial trader, or businessman, it is very important to know how to forecast the exchange rates, to minimise risks and maximise returns.

Exchange rates are linked to global markets and they change on a daily basis. While predicting their exact rate with accuracy is not possible, you can to a certain extent forecast  its direction by understanding the following.

Purchasing Power Parity (PPP)

Purchasing Power Parity is an economic theory which works on the principle that identical goods in different countries should have identical prices. For e.g. if a pair of Nike shoes costs X dollars in a particular country then it has to cost the same X dollar in a different country after the currency conversion.

The Economist Magazine has a fun way of predicting the exchange rates called the Big Mac Index. This index considers the cost of the Big Macdonald Burger in different countries to predict the exchange rate movement. Consider the present scenario; one USD is equivalent to 3.67 AED currently. In future if one Big Mac Burger were to cost one dollar in USA but the same burger is costing 4 AED in the UAE, then the rule says that the AED will depreciate in the long run to 4 AED per dollar.

Relative economic strength

If the economic strength of a nation is strong (like strong growth rate, manufacturing sector growth, low interest rate etc.) then the global investors would want to invest in these countries via their financial markets through stocks, government bonds etc. When there is a demand from global investors the currency would appreciate. This rule is a good predictor of the overall upward/downward trend of currencies.

Financial models

If you are a financial investor looking to make money from exchange rate fluctuation then you can use econometric models which take into consideration different parameters like GDP growth rate, interest rate, inflation etc,  and assign them particular values to build an equation around them. This helps get an exact number for future exchange rate.

Time series model

This method is purely technical and is not based on any economic theory. A popular time series approach is called the Autoregressive Moving Average (ARMA). This method is based on the idea that past behaviour and price patterns can be used to predict future patterns. All it needs is a time series of data which can be fed to the computer.

Another easy way to avoid the exchange rate fluctuation is to use a travel card that lets you lock in exchange rates when they are favourable. You can use the locked rates later, when the currency rates head in an unfavourable direction.

Signs to show more an expats

Has time just flied since you started living in a different country?

However when you return back home, the changes you see around, stings you hard and reminds you of how really long you’ve been away from your home. Here are few signs that secretly whisper in your ear that you are more an expat now than anything else!
1.       The confusing question
When people ask “Where are you from?”, you tend to get confused. If you need a moment to think before answering that question, then you are certainly a seasoned expat.

2.       Knowledge of politics
You probably understand the politics of your resident country better than you do of your home country. And, if you can start arguing about it with a local person, then you’ve definitely been an expat too long.

3.       Sending money home
You know everything anyone needs to know about online money transfers and remittances, and can distinguish between a dependable money transfer service provider and the scams. You know of all the ways of transferring money abroad even to loved ones without bank accounts.

4.       Helping aspiring expats
You are the official light-in-the-tunnel to every young person who dreams of going abroad, as you are no longer the fresh-off-the-boat expat but the seasoned expat who is there to help others.

5.     Going home for vacations
A trip back home is more of a holiday now! You know how to use a travel card to save money, and how to use it like a debit card without exorbitant charges. A lot of things around home may seem new and you feel a deep sense of nostalgia accompanied with a sense of adventure.

6.       Changing accent
A change in your accent is also a definite sign that you’ve been living away from home too long.  You begin to lose your natural accent and slowly start speaking in the accent of your resident country.

7.       Juggling multiple languages
You start ‘thinking’ in two languages if the languages of your resident country and home country are different.  Also, if you start using local words to express yourself better then you are immersed in your expat life.

It’s imminent that once you start living in a new country, you start adapting to their way of life and try to fit it. Over the years, it does become difficult to identify yourself with just one culture, especially if you have lived in many countries but that’s the wonderful life of an expat.

Women travelers traveling tips

“The question isn’t who is going to let me; it’s who is going to stop me.” – Ayn Rand

Today, everyone is standing up and taking notice of everything a woman can accomplish – they don’t need to wait for anyone to tell them what to do! As women are finding their own sense of empowerment, they are becoming more eager to take in everything around them and discover the world. This is why travelling – whether solo or with someone – is taking precedent over most things in their lives. It does not matter who they are travelling with or where they go, they make the decisions and head out to new adventures.

Female travellers today are breaking boundaries and indulging in the most extreme adventure holidays and fun-filled tours.

Here are some of the latest trends observed.

More active journeys: Gone are the days when women would like to travel to luxury destinations and indulge in spa treatments. Today women prefer active adventures and backpacking trips. They favour rough terrains and scenic natural beauty, and would rather indulge in activities like sky-diving and mountain climbing, then just lounge around and sip cocktails.

Local interaction: Women also like interacting with the local people and that is why they usually prefer to home stays to get a taste of the indigenous culture first-hand. They often choose to travel to places which are steeped in traditions and rich in cultural heritage.

Solo travel: More and more women prefer to travel solo and because they are smart as a whip. They make sure they invest in travel insurances from reputed organisations and take advantage of the easy mobile recharge facilities these money transfer services offer, to ensure they are always connected to family and friends.

Budget-friendly trips: Women opt for budget-friendly trips because this allows them to take frequent multiple trips. A lot of female travellers also opt for travel cards, which they can load with the exact amount of money they need and they can also lock in the exchange rates – ensuring they save and do not overspend.

Age-limit: There is no age-limit on female travel. Marybeth Bond said, “The average adventure traveler is not a 28-year old male, but a 47-year-old female. And she wears a size 12 dress.” And that’s the truth!

 

With women travelling so much, it’s time countries started taking this into account and ensure that there is enough and more protection available for them. These trends are definitely here to stay and evolve, so companies associated with travelling and vacations need to start taking this in account and offer services and benefits that cater to femaletravellers.

Tips to save money

We are all spenders at heart and unless we promote good financial habits, it could become very difficult for some of us to start saving. Of course, we’ve all heard of the good ol’ ways of saving money, like opening a bank account, not getting into debt and clearing off all our bills/dues – but here are some creative and surprising ways in which you can save money. Remember, a penny saved is a penny earned!

Work with cash: Instead of always swiping your credit card, take out some cash at the beginning of the week and use this for your weekly expenses. This will keep you from overspending.

Compare prices: Price comparison tools are easily available these days, so take advantage of them and find out if there is a lower price available for the item you want to buy – whether it’s shopping or booking tickets online.

Take shorter showers: Taking shorter showers and turning down the electrical gadgets such as heater, iron boxes, fans, lights when not used, will help you save on your electricity bills.

Curb emotional spending: Don’t shop when you are emotional. You will save a lot of money, because you indulge in a lot of unnecessary shopping when you are stressed or emotional. Rather leave your card back home and go out for a walk or go to the gym.

Implement the 30-day rule: This is an effective way to make sure you don’t spend money unnecessarily. Before you binge-buy a product, tell yourself that you will hold on for atleastone month. If at the end of one month, you still want to buy the product, go ahead. But you will amazed by the number of times you end up not buying the product and saving money.

Shop in bulk: Buy household products, personal care products and non-perishable goods in bulk. Buying in bulk almost always helps you save money, as you will get wholesale discounts.

Go the DIY way: We spend so much money on cleaning products and such household items, but it is extremely easy to make these products at home using common every-dayingredients. You will be surprised at the amount of money you save when you start making things at home yourself.

Get a travel card: Make sure you buy an international prepaid travel card before you travel, so you can save money by locking the currency rate and not fall prey to the volatile exchange rate fluctuations.

Cut on eat outs: We spend so much of money on food, especially while eating out. Cut back on this habit try to eat in as much as possible.

Sleep well: May sound funny, but a good night’s sleep will keep you healthy and cut down on your medical bills!

Crucial Backpacking Tips

Travelling into the wilderness, and exploring unexplored terrains and scenic foreign locales with only the required necessities on one’s back – that’s backpacking! Backpacking is a type of low-cost, independent travelling that is packed with thrills. Millions of students and travellers swear by the joy of backpacking. Here are 5 top tips and tricks for a fun-filled backpacking trip.

Know your geography

Backpacking trips are generally longer when compared to normal leisure trips, and the trip is planned on a lower budget. Knowing the geography of the area will give you the crucial advantage you are looking for.

Carrying the map of the place or using the maps on the mobile (downloading the offline maps on phone is a must) regularly till you get the hang of the place is important. The major roads and destination anchors will give you a sense of familiarity in the unknown place. Sooner than you know it, this sense of familiarity will help you out in all sorts of things like transportation, planning the next outer city adventure, getting the best deals in restaurants.

Understand the cultural crux

Do you know the popular hangout places for the locals? Have you tried the beverage that is popular in the area? What is the favourite pastime for the locals? While these could be trivial questions they are important from the perspective of understanding the cultural crux of the place. Getting a grip on the cultural elements of the place will go a long way in making your trip memorable and hassle free.

Choose low-cost transportation

As a thumb rule the cheapest form of transportation will be via ocean, rail and then road, in that order. So if there is a chance to go via a ferry compared to rail, use the ferry. Similarly rail will be cheaper compared to on road transportation. In many countries however roads are the only means of transportation. In this case research all your options. The local state owned buses might have good connectivity; there could be good shared cab/bike facilities as well in the area. This research will save you a lot of money and time.

Use a multi-purpose travel card

While backpacking, it is generally advised not to carry a lot of hard currency on you, however not money transfer shouldn’t leave you standing at money withdrawal counters frequently, as you will be wasting a lot of valuable time by doing so. Make sure you have a valid multi-purpose, multi currency travel card which will make your life easier.

Beware of Scamsters

Be careful of scam artists and pickpockets, these elements are always there, it doesn’t matter which country you go to. Your low cost trip could be sabotaged if you encounter them – you will be spending a lot of your time trying to get your trip back on track and in many cases it could to be halted midway. Some of the best ways to avoid these fraudsters are, travelling light, carrying a handy lock with you, travelling in groups, hidden pockets and money belts.

Tips for Expats on Wedding Gifts

When the wedding bells ring, it’s time for both excitement and tension. The excitement is natural for the family, the bride and groom in question and friends. Now imagine the stress that family and friends go through wondering what to gift the expat couple. After all having lived abroad, it’s difficult to figure out what’ll be useful and can be carried back without too much hassle. Don’t fret, here are four great options of how and what you can gift your expat soon-to-be-married friend.

Online gifting

Knowing the likes and dislikes of the groom or bride can help in finding the perfect gift for them online. Check if it can be shipped to the country of residence and just buy it. Alternatively, you could courier something directly, but it might prove to be a bit expensive. Imagine the surprise and sheer joy when the bride/ groom open their gift.

Gift coupons/ cards online

A gift card is loaded with money which can be redeemed while shopping online. Online retail majors such as Amazon have this service. The receiver can then choose to buy whatever they need or like with the gift card. These have a validity date and can be purchased for denominations of your choice. The couple receives a gift card via email and all they need to do is shop with the gift coupon code. So convenient, yet so thoughtful.

Gifting via a wedding registry

Wedding registries are very popular in developed nations; the bride and groom register themselves on the registry and you can choose to gift the couple from the published list.  This allows you to know even before gifting what the couple would like and secondly the gifts could be shipped to them directly.

Prepaid Travel Card

Purchase a prepaid travel card and load it with an international currency such as the USD (accepted in all countries). These multi-purpose travel cards also come with free travel insurance and currency rate locking facility. The couple can use it during their travels or on their honeymoon. It’d be a truly memorable gift.

Of course the expat couple going ‘home’ to get married would also need to have ready money to spend. They can always transfer money before leaving, via bank transfer using the services of a money exchange provider. Alternatively, they can carry some foreign exchange to be converted when the need arises. Or they can even carry a travel card and load it with currency for all their shopping needs.

As for those wondering what to gift, you know what to do, so start shopping and spread the joy.

Necessity of learning money value by children

In today’s  uncertain world, judicious management of money is critical. As an expat parent it’s imperative to teach your child the important lessons in financial planning, preparing them to face challenges of adulthood. Make sure your children have a good understanding of the nuances of budgeting, saving and spending, so their financial future is more secure.

According to Beth Kobliner, author of the New York Times bestseller “Get a Financial Life, and a member of the President’s Advisory Council on Financial Capability, “The sooner parents start taking advantage of everyday teachable money moments (for example, give a six-year-old $2 and let her choose which fruit to buy), the better off our kids will be. Parents are the number one influence on their children’s financial behaviour, so it’s up to us to raise a generation of mindful consumers, investors, savers, and givers,”

Children develop understanding with age. Hence as a parent it’s best you teach them about money management as early as possible. We suggest you to playfully begin their financial education as early as when they are three years old. To help you get started, we give below a breakup of what you could teach your children at different ages:

Ages 3-7 (Pre-school age):

  • ·         We need money to buy things
  • ·         We need to wait for the right time to buy things
  • ·         There are different denominations and value for money

 

Ages 8-11 (Primary school age):

  • ·         Comparing prices before you buy things is a good habit
  • ·         Money is limited, so you need to spend money wisely
  • ·         We need to earn money
  • ·         The sooner you start saving money, the faster your money will grow

 

Age 12-18 (High school age):

  • ·         Start saving habits early in life
  • ·         Cash is always better than credit
  • ·         Differences between credit cards and debit cards, and how credit card spending is nothing but borrowing money, which needs to be paid back with interest
  • ·         Storing a copy of all your receipts and checking your expenses at the end of every month
  • ·         Keeping  track of your mobile phone payments
  • ·         Opening a bank account
  • ·         Always working out a budget before you start spending

 

Given that the world is a global village, with people working across countries and students going to study and travel abroad using travel card, dealing with different currencies is derigueur. Parents should sit their children down and discuss about currencies, exchange rates and how money transfers work and how to find a right remittance provider.

 

Teaching your children about money is very crucial and the more they know about money, and the sooner they develop better saving habits, the more secure their future will be!

Importance of noticing dollar movement

Did you know that getting competitive currency exchange rates can positively influence the amount and frequency of money you send home?

As an expat, ensuring your loved ones receive the maximum value for every unit of the currency remitted, is always important. While there are several factors that determine the amount of money that actually reaches your family, the US Dollar (USD) movement is a key one to track. If you are living in the UAE and need to send money home, it’s important that you be aware of the influence USD has on your currency and hence figure out the best time to remit money. Three points to keep in mind on why you should watch the dollar movement before you remit are:

  1. The United Arab Emirates Dirham (AED) is pegged to the USD, hence a strong dollar ensures higher amount of remitted money. Minor fluctuations do not make a massive difference to smaller remittances.
  2. If your home currency loses ground against both the USD and AED, and you are a remitter in the UAE, then that would be the best time to send home money & load your cash card because each dirham will yield more in your destination currency.
    So if you are home currency is Indian Rupees (INR) and it falls against the USD and AED, then send money home. Your family will get more money in hand!
  3. The volatility of the USD is important in the context of the nature of remittance. For e.g. if you are remitting money as an EMI to buy a property in your home country, it may be prudent to speak with yourauthorised money exchange service provider to explore contracted options to cover the risk.

It is also important to take advantage of the right window of opportunity when it presents itself, such as the recent strengthening of the USD against Asian currencies that resulted in a strong outflow of remittances from the UAE.

Exchange rates are ever volatile, so before you remit money, make sure you are well aware of the exchange rates and determine how much money will be received by your family.  Send money only through reputed money transfer service providers who offer the best competitive exchange rates. Don’t lose money anymore to unscrupulous rates. Plan well ahead and remit at the right opportune time!

Travel Cards Better than credit cards

Travel cards have become very popular over the years mainly because of the convenience and security they offer. Being the easiest way to buy foreign currency and take it overseas, travel cards such as gocash are a big hit among frequent travellers. Industry experts have claimed that apart from being the safest option, travel cards are also the cheapest option for travellers, especially for those who are travelling on a budget. These travel cards offer a host of benefits when compared to credit or debit cards.

When compared to traveller’s cheques or carrying hard cash, travel cards are a better option because these cards can be pre-loaded with money of a single currency or even multiple currencies, based on your travel plans. Most cards offer standard currencies such as US Dollars, UK Pounds, and Euros, as well as other world currencies ( gocash offers upto 16 world currencies). Once the travel card has been topped up, they can be used as a regular debit card to withdraw cash from ATMs, buy products, online purchases, pay bills, flight tickets and for many other expenses.

Benefits derived from travel cards when compared to credit/debit cards:

  • Facility to lock ideal exchange rates for future use. So, no matter how badly the currency fluctuates, the amount loaded onto the card does not get devalued.
  • The flat ATM withdrawal fee for travel cards is much lower than the charges associated with debit/credit cards.
  • A single travel card can be loaded with multiple world currencies at the locked exchange rate. Spending in local currency means, not having to pay any conversion fees!
  • Since these cards are loaded with a fixed amount of money, the temptation to overspend is curbed. There is no overdraft facility in travel cards.
  • These cards are absolutely secure and should they get lost, a lot of the issuing banks will replace the card almost anywhere in the world. Also, losing these cards means you are losing only a small amount of fixed money and not all your money.
  • Travel cards offer free travel insurance, which credit/debit cards usually do not provide.

No stress, no fuss and wherever you go, cash is available. Armed with this information, now travel with peace of mind.

Have you got your travel card yet?

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