If you are already an expat in Fuerteventura, or are thinking of buying property on the island in 2016, it will be important to take extra care in planning your finances. A key area to consider is the cost of sending money to and from Fuerte. David Comber, Senior Trader at Smart Currency Exchange, looks at some of the important economic events affecting exchange rates and how this could affect your transfers.

Anyone sending money to or from Fuerteventura is exposed to the fluctuating euro-sterling or euro-US dollar exchange rates, and with key economic and political events for the countries that these currencies represent towards the end of 2015 and on the horizon for 2016, the exchange rates are likely to change dramatically at very short notice. Unless you plan ahead, this can make it impossible to know what exchange rate you will receive when making a currency transfer and therefore how much you will get from your money, making it difficult to budget for any larger payments, such as for buying a property, paying a deposit, or making any regular household payments.

How economic events affect exchange rates

We have seen the effects of economic, political and social events on exchange rates time and again, with early 2015 a case in point. Only a week into January 2015, sterling hit a 17-month low against the US dollar, at the same time reaching a six-year high against the euro.

December is usually a busy month for economic data, with key announcements that often have a notable effect on a whole raft of currencies. We have already seen this in December 2015, with one central bank decision causing dramatic movements for sterling, the euro and the US dollar. News about the US interest rate decision this week is expected to bring about yet more sudden and significant change for the currency markets.

The European Central Bank (ECB) President Mario Draghi was expected to extend the Quantitative Easing (QE) programme he introduced in January 2015, following many hints that this would be the case. In anticipation of this announcement, in the days leading up to the announcement, the euro fell against sterling, standing strong at the time, and the even stronger US dollar. Yet on the day, the programme was only extended for six months. This took the markets by surprise, and the euro strengthened against sterling and the US dollar.

With a number of similar economic events almost certainly in the pipeline, we are likely to see further exchange rate movements, so now is an important time to plan your currency exchange strategy for the rest of 2015 and any significant payments in the New Year – this means you can make the most of your money and remove additional worry over the busy festive season, as well as providing peace of mind in preparing for the year ahead.

How to protect your money
Currency specialists, such as Smart Currency Exchange, monitor the currency markets carefully, keeping clients updated about how any movements affect their finances, and offering guidance on the best ways to make any exchanges according to particular needs and circumstances. A useful way to avoid losing money from sudden swings in the exchange rate can be through forward buying currency for planned larger payments, using a specialist currency product called a Forward Contract, which essentially lets you set the exchange rate at a time that works for you, so you can know exactly what exchange rate you will receive for future payments.

SmartDavid Comber is a Senior Trader at Smart Currency Exchange. If you want to hear more about how Smart Currency Exchange can help you get the most from your money when making transfers to Spain, you can give them a call Freephone on +44 808 163 0102 or register online at smartapplyonline.com