Whether you’re an expat having to pay for your child’s South African university education, an emigrant supporting loved ones back home, or you’re transferring funds to manage investments, property, or other assets in SA, chances are you’re going to have to bring large sums of money back into the country at some point.
If you happen to work and live in one of the many rich-world countries that have stronger currencies than South Africa, you already have a lot going for you. For the price of a top-of-the-range Golf in the UK, for instance, you could buy yourself a two or three-bedroom house with a sea view on the KwaZulu Natal South Coast. As Harry Scherzer, CEO of international money transfer fintech Future Forex, points out, however, you can make that advantage work even harder.
“Just as anyone taking money out of South Africa should look to minimise the disadvantages of a weaker currency, so anyone bringing money into South Africa should look to maximise their currency’s strength against the rand,” he says. “The best way of doing so is through a combination of timing, observation, and using the right service providers.”
Timing and observation matter
When it comes to timing, you’re looking to capitalise on exchange rate fluctuations. While the events of the past few years have shown how quickly things can shift one way or the other, you can still spot broad trends that can help guide you decide when to make your international money transfer.
One way of doing so is to keep an eye on economic news for market shifts. You could also set up Google alerts for terms like “Rand up,” “Rand falls”, or “Rand rises” and you’ll soon be able to spot longer-term trends.
As Scherzer points out, there are economic markers that have a particularly strong impact on the rand. If you’re observant, you’ll be in a much better position to time shifts in the currency.
“Historically, the rand tends to dip during global uncertainty and rally during commodity booms,” he says. “Transferring money when the rand is in your favour can maximise value for family support or investments back home.
“While the trend holds broadly, it’s not absolute,” Scherzer cautions. “Domestic factors, like political instability, policy uncertainty, or a resumption of the power crisis can offset global commodity gains and weaken the rand even during booms.”
Suppliers really do matter
According to Scherzer, you may get even more out of your international money transfer simply by choosing the right supplier.
“Most people would be tempted to simply use their bank,” he says. “But that’s seldom the best option. While many banks, especially international ones, have improved the international money transfer process, it can still feel much more complex than it needs to be.”
Another issue with using banks for international money transfers, Scherzer points out, is their lack of transparency.
“Most people pay far more than they should for international money transfers without even realising it,” the Future Forex CEO says. “That’s because banks seldom make all of the charges associated with such a transfer clear to the customer.”
He points out that of particular concern is the “spread”—the difference between the buy price and the sell price, which banks use to pad their revenue from every exchange.
“In other words, people must do their homework when transferring money into South Africa,” says Scherzer. “Ideally, they should look for a supplier that provides the best possible experience and which is completely transparent in the fees it charges.”
There’s even a moral case for making your international money transfers work as hard as possible.
“Every pound, dollar, or euro spent in South Africa has an outsized impact,” he says. “Why not use all of the tools at your disposal to maximise that impact?”