What day of the week is best to buy currency? Is it better to buy it in the morning or the afternoon? Should I hold off getting my US dollars until next week? All good questions with only one answer.
No one knows.
Over time, no one has ever been able to work out the 'perfect time' to buy or sell the Australian dollar, or US dollar or any currency in the world.
The currency market is huge. It's the largest, most liquid market in the world and it runs 24 hours a day. If there were a perfect time to buy or sell currency, everyone in this market would do it at the same time.
Having said that, here are a few tips on how you can try to improve your exchange rate:
- Instead of monitoring the rates every day, use a rate alert. If you are buying currency for an overseas holiday, the Travelex rate tracker is good. For overseas money transfers, both Transferwise and OFX have a rate alert service that is free of charge. All these services are free and you are not obliged to use the company that is notfying you of the rates.
- Compare your rate. Simply getting a couple of quotes from other banks or currency companies can often result in a better exchange rate and save you some money.
- Use a limit order. If you are transferring money overseas, some banks or money transfer companies will allow you to do a 'limit order'. You nominate the amount of currency you want to buy or sell and what rate you want. If the exchange rate gets to your nominated rate, your transaction is locked in. The benefit of limit orders is that you could get a better exchange outside of business hours and this allows you to take advantage of a positive rate movement. It does come with risks though. If the exchange rate doesn't ever get to your nominated rate, you could be left worse off.
- Get practical advice but be wary of forecasts. It can be dangerous to put all your hopes on an exchange rate forecast. Exchange rates aren't like stock or house prices. They are incredibly hard to forecast or predict.
So while the 'perfect time' to buy or sell currency might seem out of reach, use what free tools and tips you do have at your disposal to make the most out of your money.