All you need to know about OFW Remittance Protection Bill
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OFW Guide | All you need to know about OFW Remittance Protection Bill

Updated on April 18, 2019 03:32 pm
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Meaning of OFW

An Overseas Filipino Worker (Pilipino sa Ibayong-dagat) is a person of Filipino origin who lives outside of the Philippines for employment, work contract and students.

What is OFW Remittance Protection Bill?

House of Representatives has passed the much-awaited OFW Remittance Protection Bill. This bill seeks to safeguard the interest of the millions of OFW worldwide, protect their hard-earned money, and educate the beneficiaries.

Here is a list of all you need to know about OFW Remittance Protection Bill

  • Discount on remittance transfer fees.

One can avail up to 50% discount depending on the amount being remitted. The discount slab is regressive to the remittance amount.

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  • Tax Deduction

The bill proposes a mandatory tax deduction for the remittance service providers as an incentive to offset the cost of discounts. Further, the establishments and intermediaries granting discounts on remittance fees may claim tax deductions based on the cost of services rendered to OFWs.

  • Ceiling Limit on fees

The bill aims to set a ceiling limit on the remittance fees and prohibits charging a higher fee than the prescribed ceiling limit. Financial intermediaries/ banks/transfer operators offering remittance services to OFWs are not allowed to raise fees without prior consultation and approval by the Bangko Sentral ng Pilipinas (BSP), Department of Finance (DOF), and Philippine Overseas Employment Administration (POEA).

  • Penalty

For the individuals, the bill provides measures of penalties such as imprisonment and fines to any individuals found violating provisions of the Act.

For the institutions governed and supervised by the BSP, the bill has measures which subject violators to fines, penalties, and sanctions as provided under the New Central Bank Act, General Banking Law of 2000, and other banking regulations as applicable.

  • Education

The bill imposes the DOF, the BSP, and POEA to provide a mandatory financial education program for OFWs and their families. The provision of education includes providing information on financial management, training on budgeting, and explaining various investment and loan options to improve the financial literacy of the OFWs and their beneficiaries.

The Philippines with record-breaking inward remittances has significantly contributed towards keeping the economy of the archipelago afloat. In recognition of this contribution, the OFW Remittance Protection Bill is set to save billions of dollars, which translates to more money in the hands of the beneficiaries.

There are ways to save money in every step of the process of remitting and research is key. At CompareRemit, we help you compare the best option before you remit your hard-earned money. Click here to see the offers of top players.

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How to Send Money to the Philippines Using GCash

In an ever connected world, online money transfers are naturally the preferred and most convenient method for sending money across international borders, making it easier than ever to support your family, friends, or business partners in the Philippines.Whether you're an OFW (Overseas Filipino Worker) or a person with ties to the Philippines, this blog will walk you through the step-by-step process of sending money through GCash, the Philippines’ leading mobile wallet, to effortlessly and securely send money to your loved ones.Say goodbye to long queues and lengthy paperwork – and say hello to instant and accessible money transfers.What is GCash?Gcash is a mobile wallet and financial services platform based in the Philippines which came into operation in 2004. It was introduced by Mynt, a subsidiary of Globe Telecom, one of the Philippines’ major telecommunications companies.GCash allows users to carry out various financial transactions, mobile payments, and services through their mobile phones, making it a convenient and efficient way to manage money.You can make bank transfers, pay bills with QR codes, take out loans, and top-up airtime on your mobile phone. It is one of the most popular mobile wallets in the Philippines and the most convenient option for Overseas Filipino Workers (OFWs) to send money to their loved ones in the country.With 81 million active users and 2.5 million merchants and sellers as of May 2023, GCash is truly the undisputed mobile wallet king in the Philippines.Why Should You Get GCash?This is especially important for people who want to send money to the Philippines. GCash offers multiple benefits for sending money to the country:Convenience: You only need a mobile app to send money to friends and family in the Philippines making it easily accessible and convenient. You need not go to any money transfer centers to make a money transfer.Mobile Services: Apart from money transfers, it offers a wide range of financial services, such as bill payments, online shopping, and even investments.No Need for Bank Account: Your recipient does not need a bank account to receive money through Gcash.Speed: It is faster to send money to Gcash than traditional methods. Your recipient can receive the money instantly or within a few minutes, depending on the transaction type.Lower Fees: Due to its lower fees, it is a cost-effective method to send money to the Philippines.Extensive Network: Gcash has a vast network of partner merchants, banks, and money transfer companies in the Philippines, making it easy for the recipients to access and withdraw the money.Security: Various security measures such as PIN verifications, fingerprint scanning, and two-factor authentication are put in place to protect users’ accounts and transactions.How Does GCash Work?To use GCash, you need to download the GCash app from the App Store or Google Play and sign up for an account. You will enter your personal details (mobile number, name, address), complete the customer verification process, and create a secure PIN.After creating your account, you will need to fund your GCash Wallet. There are several ways to do this:Link your bank account or credit/debit card to your GCash accountDeposit cash at GCash partner outletsReceive money from other GCash users.Once your GCash is funded, you can start using it for various transactions, such as:Send money to other GCash users or non-GCash users through the “Send Money’ feature. This feature allows you to transfer money to family, friends, or anyone with a mobile number.Pay bills for utilities, credit cards, and other services directly through the appPurchase mobile prepaid loads for your phone or for your loved ones, as well as data packages from various telecom providers in the Philippines.GCash can be used for online shopping on partner merchants’ websites and appsGCash QR payment feature enables you to pay for goods and services in physical stores by scanning QR codes displayed by merchants.Convert your GCash balance to cash by cashing out at partner outlets or through participating banks and ATMs.How to Transfer Money to Philippines Using GCash?The best way to send money to GCash, Philippines is through a digital money transfer platform. Gcash has partnered with several top online money transfer companies including Remitly, Skrill, Wise, WorldRemit, and Western Union among others.These platforms allow you to send Philippine Pesos (PHP) to Gcash in an affordable, quick, and efficient manner.How to Send Money to Gcash Mobile Wallet via an Online Money Transfer App?Here are the steps to follow:Sign up on any of the third-party money transfer apps or platformsEnter your personal detailsGet your account verifiedEnter transfer amountEnter your recipient's countryChoose GCash as your delivery methodEnter the recipient’s GCash-registered name & account numberConfirm your transferPay for the transferPesos will be deposited to the recipient’s GCash AccountMoney Transfer Platforms Offering GCash as a Delivery OptionWiseUsing Wise, you can send PHP to any individual or business bank account in Philippines or mobile money to any of the several mobile wallets such as GCash, PayMaya, GrabPay, Starpay, etc. To send money to mobile wallets, you'll need your recipient's mobile number, starting with the country code +63. The maximum limit for money transfers to bank accounts and mobile wallets is 9 million PHP per transfer and 50,000 PHP per transfer respectively. It may take 1-2 working days to complete the transfer.RemitlyYou can do a Remitly transfer to GCash via Mobile Money in the Philippines. Remitly offers two ways to transfer money to Gcash wallets in Philippines based on how you pay for the transfer. Using a debit card (Express) to pay will take a few minutes for the money transfer while it may take 3-5 business working days if you pay via than bank account (Economy). The GCash wallet limit is PHP 100,000. Make sure you have sufficient funds availability in your account to do the transfer. Remitly is the optimal choice to send GCash from USA if you are looking to make fast and secure mobile payments.WorldRemitWorldRemit facilitates mobile money transfers to several mobile wallets in the Philippines including GCash. The cash is deposited within minutes. You can send up to PHP 50,000 per transfer and a maximum of PHP 100,000 total remittances per month to the mobile wallet. To avoid delay in transfer, make sure your recipient's details are correct. WorldRemit might be your cheapest option as they often charge no fixed fees, but this depends on the sending country. In the case of top-sending countries like the USA, the company does not charge fixed fees.Western UnionWestern Union is a well-known international money transfer service that has partnered with GCash to facilitate remittances to the Philippines. To initiate a transfer, you can simply go to your GCash account and proceed to the Cash-In segment within the GCash App and opt for Western Union as your preferred money transfer option. Or you can either go to a Western Union Branch or their website to make the transfer. You will find that sending money to a mobile wallet, GCash is less expensive than sending cash to a pickup location.MoneyGramMoneyGram, a well-established money transfer company is also a GCash partner, enabling users to receive international remittances directly into their GCash wallets. To send money directly to GCash wallet, either go to the MoneyGram website or any agent location. Provide your recipient's details and select 'Mobile Wallet as your delivery option. Both you and your recipient will receive a notification once the money is sent.XoomBy partnering with GCash, Xoom enables users to effortlessly transfer funds to GCash accounts. To start the transfer process from Xoom to GCash, download the Xoom app, and create an account. Then, enter the transfer amount and choose GCash as the receiving option, provide the details of your recipient's mobile wallet, and pay for your transfer using a PayPal account, bank account, credit card, or debit card.Xoom may be a popular option for transferring funds to GCasg, however, they are a little expensive due to transfer fees and exchange rate margins. Look for cheaper alternatives on our list.PangeaPangea provides global money transfers to regions in Latin America and Asia. Through their mobile app, you can make the payment and use your linked bank account or debit card to pay for the transaction. If you pay using a card to transfer money for pickup, your recipient will receive the funds within minutes, while selecting a bank transfer method will take a little longer.While Pangea does not offer direct transfer to a mobile wallet like GCash, you can still make an international transfer to the Philippines, and then your recipient can transfer that money to their GCash account.SkrillBy leveraging its digital wallet expertise, Skrill offers users a secure and efficient way to send money to GCash, contributing to the financial accessibility of recipients in the Philippines. Skrill offers various ways to transfer money to GCash including bank account transfer, payments via debit card or credit cards, and letting you choose mobile money transfer. Opting for bank transfers is typically the cheapest, allowing you to send funds from your bank account to a GCash wallet at a lower cost compared to other payment methods. However, the transfer will take a little longer.Note: The availability of GCash GCash as a delivery option on the above money transfer platforms can differ due to variables like the sender's location, the platform's offered services, and potential shifts in partnerships. It's recommended to visit the platform's website or app prior to utilizing any money transfer service to verify the current selection of delivery methods and choices for sending money to the Philippines.What is the Cost of Transferring Money to GCash?The cost of transferring money to GCash can vary depending on the service provider, the country you are sending money from, the transfer method you choose (bank transfer, debit/credit card, etc.), the amount being sent, and any applicable fees for currency conversion or processing. 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How to Send Money To Canada

In today's globalized world, sending money abroad has become a common necessity. People transfer money across international borders for various reasons, such as supporting family members abroad, paying for education or medical expenses, carrying out business transactions, or even for trips overseas.International money transfers facilitate these financial transactions, allowing individuals and businesses to transfer funds safely and efficiently to recipients in different countries.However, navigating the intricacies of international money transfers can be daunting. Factors such as exchange rates, transfer fees, and security concerns can significantly impact the efficiency and cost-effectiveness of your international money transfer.Canada, known for its strong economy and diverse population, attracts people from around the globe. Whether you have family or friends residing in Canada, need to transfer money for business, or are relocating to the country, knowing how to send money to Canada is crucial.In this blog, we will walk you through the process of sending money to Canada, step by step. We will explore the different transfer methods available, and discuss the factors you need to consider to help you make an informed decision that suits your specific needs to send money to Canada.International Money Transfer BasicsInternational money transfers have become increasingly important in today’s day and age.  By understanding the basics, you can navigate the process of sending money abroad more confidently.Exchange Rates and Their Impact on Money TransfersExchange rates represent the value of one currency in relation to another. They fluctuate constantly due to various factors such as economic conditions, interest rates, geopolitical events, and market forces.The exchange rate can significantly influence the overall cost and value of your transfers.When sending money to Canada, you will need to convert your currency into Canadian dollars (CAD), and the exchange rate will determine how much CAD you will receive for your money.CAD Currency Forecast for 2023Economists and currency analysts expect the Canadian dollar to strengthen against the US Dollar in 2023 and into 2024, owing to several factors, such as an optimistic global growth and inflation outlook, a possible change in expectations regarding monetary policy, and an overall environment that favors taking on more risks.As per Trading Economics, the CAD is expected to trade at 1.34 by the end of this quarter, and in 12 months’ time, it is expected to trade at 1.39.As central banks approach the end of their cycle of raising interest rates, economists are more optimistic that the global economy may avoid a recession this year. This positive outlook is expected to have a favourable impact on the Canadian dollar, potentially providing it with a boost.How Do Exchange Rates Impact Money Transfers?The Exchange Rate: The actual rate at which currencies are exchanged.  The Exchange Rate Margin or Markup: The additional fee or markup charged by banks, money transfer providers, or financial institutions for facilitating international transactions.The Exchange RateWhen the exchange rate is unfavorable, it means that your currency has a weaker value compared to the Canadian dollar. As a result, you will receive fewer Canadian dollars for the same amount of your currency, reducing the value of your transfer. This can be a significant concern, especially when sending large sums of money.The Exchange Rate MarginThe exchange rate margin adds an extra cost to your money transfer. Banks and financial institutions often apply a margin to the real-time exchange rate to cover their operational costs and generate profits. These margins can vary widely between providers, with some offering more competitive rates and lower fees than others.Therefore, it's smart to compare exchange rates and margins across different providers to ensure you're getting the best value for your money.How Do I Get the Best Exchange Rates When Sending Money Overseas?There are a few ways to get the best exchange rates when you want to transfer money to Canada.Time Your Transfer:Exchange rates are constantly changing, so keep an eye on the currency market and monitor exchange rate trends. This can help you identify favorable times to transfer money when the rates are more advantageousHedging Options:Some providers offer hedging options, such as forward contracts or limit orders, which allow you to lock in an exchange rate for a future transfer. These tools can help protect you from unfavorable rate fluctuations and provide more certainty in your transactions.Compare Transfer Providers:Research and compare different money transfer providers to find the ones that offer competitive exchange rates and lower exchange rate margins. Online money transfer services and specialized remittance companies often provide more favorable rates compared to traditional banks.Factors to Consider When Sending Money to CanadaThere are several important factors to consider to ensure a smooth and cost-effective transactionExchange Rates: As we have discussed, exchange rates can significantly impact the value of your money transfer. Compare the exchange rates offered by different providers and consider opting for a provider that offers competitive rates with minimal markup. Timing your transfer when exchange rates are favorable can also help maximize the value of your money.Transfer Fees: Different money transfer providers charge varying fees for their services. Compare the transfer fees across different providers to find the most affordable option. The fees may vary based on the transfer method, amount, and speed of delivery.Transfer Speed: Consider the urgency of your transfer and the speed at which you need the funds to reach the recipient when choosing a transfer provider. Some providers offer faster delivery options for an additional fee, while others may have longer processing times. Choose a transfer method that aligns with your timeline requirements.Security and Reliability: Ensure that the money transfer provider you choose has robust security measures in place to protect your funds and personal information. Look for reputable and trusted providers with positive customer reviews and a track record of reliability in handling international transfers.Delivery Options: Consider the available options for the recipient in Canada to access the funds. Can they receive the money directly into their bank account? Can they pick up cash from a designated location? Assess the convenience and suitability of the options offered by the provider.Regulatory Compliance: Ensure that the money transfer provider adheres to the regulatory requirements for international transfers to Canada. This includes compliance with anti-money laundering (AML) and know-your-customer (KYC) regulations to ensure the legality and transparency of the transaction.Customer Service: Evaluate the quality of customer support provided by the money transfer provider. In case of any issues or inquiries, it is important to have access to reliable and responsive customer support channels that can assist you promptly.Customer Reviews: Read reviews and seek recommendations from trusted sources or individuals who have previously sent money to Canada. Their experiences and insights can provide valuable information about the reliability, efficiency, and overall experience of different money transfer providers.Different Methods of Sending Money to CanadaThere are three main ways you can send money abroad, each with its own advantages and considerations. Consider factors such as transfer fees, exchange rates, speed, security, and recipient preferences when choosing the most appropriate method to send money to Canada.Bank TransfersBank transfers involve sending money from your bank account to the recipient's Canadian bank account bank. Bank transfers are commonly used for large transactions or regular payments. To initiate a bank transfer, you typically need the recipient's bank account number, routing number, and the bank's SWIFT/BIC code. A bank transfer can take several business days to process, and fees may vary depending on the banks involved.Online Money Transfer ServicesOnline money transfer services mostly operate through dedicated online platforms or mobile apps and offer a convenient and often cost-effective way to send money to Canada. To use an online money transfer service, you usually need to create an account, provide identification documents for verification, and enter the recipient's details. Online money transfer services offer competitive exchange rates, lower fees compared to banks, and faster transfer times, often completing transfers within one to three business days.Remittance CompaniesRemittance companies specialize in facilitating international money transfers. These companies have extensive networks and partnerships with financial institutions worldwide, including Canada. Remittance companies typically offer multiple options for sending money, including wire transfer, bank transfers, cash pickups, and mobile wallet transfers. They often have a wide range of agent locations where recipients can collect cash in Canada. Remittance companies may charge varying fees and offer different exchange rates, so it's important to compare options to find the most suitable provider to transfer money.Step-by-Step Guide to Send Money to CanadaHere are the general steps to send money to Canada:Depending on your transfer needs, in terms of speed, convenience, cost, and security, explore different transfer methods available, such as bank transfers, online money transfer services, or specialized remittance companies.Choose a reliable provider that suits your specific needs. Comparing multiple providers can help you find the most cost-effective and reliable option.With the preferred service provider, register an account and provide the necessary identification and verification documents. This step ensures compliance with anti-money laundering (AML) and know-your-customer (KYC) regulations.Provide accurate information about the recipient, including their full name, contact details, and bank account information. Double-check the details to avoid any errors that could delay or disrupt the transfer.Calculate the costs and fees associated with the transfer, including any upfront charges, exchange rate margins, and potential intermediary bank fees.Initiate the Transfer after entering the transfer amount and confirm the transaction.Track the transfer status with the help of the tracking number or transaction reference. Most providers also send notifications or updates via email or SMS.Let your recipient know about the upcoming transfer. Share any relevant information such as the expected amount, currency, and estimated time of arrival.Contact customer service immediately for assistance if any issues or delays occur during the transfer. They can provide guidance and resolve any concerns or inquiries you may have.Three Reasons to Use Money Transfer SpecialistsMoney transfer services are dedicated to the task of transferring money-it’s what they do all day, every day.Here are three key reasons:Cost-Effective: Money transfer specialists often offer more competitive exchange rates and lower fees compared to traditional banks. They specialize in international transfers and have streamlined processes that allow them to offer better rates.Faster Transfers: They are known for their efficient and speedy transfer services. They have dedicated systems and networks in place to ensure quick processing of transactions. In some cases, transfers can be completed within minutes or a few hours, depending on the provider and the destination country.Expertise and Support: They have extensive knowledge and expertise in international transfers. They can provide personalized assistance and guidance to help you navigate any challenges or concerns you may have during the transfer process. Their customer support teams are often well-equipped to address any queries or issues you may encounter.Top Online Money Transfer Providers to Send Money to CanadaWiseFormerly known as TransferWise, Wise is a trusted and popular choice to send money to your recipient's Canadian bank account. They offer competitive exchange rates, low fees, and transparency in their pricing. Wise stands out for its user-friendly interface and easy-to-use platform, making it convenient for individuals and businesses to send money abroad.XE Money TransferRegarded as a reputable money transfer provider, XE offers fast and secure online transfers to Canada. Known for their competitive exchange rates and no transaction fees, XE provides a cost-effective solution for sending money internationally. With a user-friendly website and mobile app, they offer a seamless experience for customers looking to transfer money to CanadaRemitlyRemitly is a popular choice for individuals sending money internationally. They provide competitive exchange rates and offer two different transfer options: Express and Economy. Remitly's user-friendly platform and mobile app make it easy to send money conveniently and securely, catering to the needs of customers looking for quick and reliable transfers.WorldRemitWorldRemit is a well-established money transfer service that enables fast and secure transfers to Canada. With competitive exchange rates and low fees, the provider offers a user-friendly online platform and mobile app for hassle-free money transfers. They provide multiple transfer options, including bank account deposits, cash pickups, and mobile wallet transfers, making it convenient for your recipients in Canada.InstaremInstarem is a digital cross-border payments company that offers efficient and low-cost international transfers. With competitive exchange rates and low fees, Instarem provides a transparent and reliable platform for sending money internationally. Their fast-processing times and user-friendly interface make it a popular choice for individuals and businesses.SkrillSkrill is a widely recognized digital wallet and payment provider that also offers money transfer services to several countries. With a focus on simplicity and convenience, Skrill enables users to send money quickly and securely through their online platform and mobile app. They offer competitive exchange rates and transparent fees, making it a suitable choice for online money transfers.XoomXoom, a PayPal service, specializes in international money transfers all across the globe. They offer competitive exchange rates and a convenient online platform for sending money securely. Xoom provides various transfer options, including bank account deposits and cash pickups, catering to the diverse needs of customers looking to transfer funds abroad.PandaRemitPandaRemit is an emerging online money transfer company that focuses on providing efficient and reliable international transfers. They offer competitive exchange rates and low fees, ensuring cheaper transactions. PandaRemit's user-friendly website and dedicated customer support make it a promising choice for transferring money to Canada.Western UnionWestern Union is a well-established and widely recognized money transfer service that allows individuals to send money abroad through their online platform or physical agent locations. With a vast global network, Western Union offers convenient transfer options, including cash pickup and bank account deposits. While their fees and exchange rates may vary, Western Union remains a reliable choice for international money transfers.OFXOFX is a trusted provider of online money transfers, offering competitive exchange rates and low fees. They specialize in international transfers for individuals and businesses, providing dedicated support and secure transactions. OFX's user-friendly platform and personalized service make them a popular choice for those seeking reliable and cost-effective transfers to Canada.ConclusionSending money to Canada can be a straightforward process with the right approach. By considering various factors such as exchange rates, fees, transfer speed, and convenience, you can make informed decisions about the best method to send money to Canada.There are several top online money transfer services to choose from when sending money online. Whether you prioritize low fees, speed, or ease of use, these companies provide excellent options for sending money securely to Canada. By comparing their features and services, you can select the best online money transfer provider that suits your specific needs and preferences.Before sending money internationally, check out our online comparison tool to view top money transfer service providers side by side and always get the best exchange rates!

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A Complete Guide to International Currencies

Whether it’s for conducting cross-border business, managing personal finances during travel, or analyzing global economic trends, an understanding of international currencies is essential for making sound financial decisions and thriving in an interconnected global economy.If you are a globetrotter seeking new adventures, a savvy investor navigating the global market, or simply an inquisitive mind fascinated by the intricacies of the financial systems, this guide will provide you with a comprehensive overview of international currencies, their characteristics, and the current state of the top international currencies.Central to our exploration of international currencies is the concept of exchange rates. We will also delve into how exchange rates work and the factors influencing them.Let’s unravel the mysteries of international currencies, connecting us all through the language of money.What is a Currency?A currency is a form of money used in a specific country or region as a medium of exchange for goods, services, and investments. Each currency is represented by a unique code, which helps distinguish it from other currencies. For instance, the United States dollar is denoted as USD, the euro as EUR, and the British pound as GBP.What are International Currencies?International currencies are monetary units that are widely accepted and used for transactions across national borders. They serve as a medium of exchange, facilitating trade, investment, and financial transactions between countries.  These currencies are typically issued and regulated by sovereign nations or groups of countries and they are accepted beyond their country of origin due to factors such as economic stability, geopolitical influence, and international trade relationships.Major international currencies, often referred to as reserve currencies, such as the US Dollar and the Euro are held in substantial quantities by central banks around the world to support international transactions and maintain financial stability. Other major international currencies include the British pound (GBP), Japanese yen (JPY), Swiss franc (CHF), Canadian dollar (CAD), Australian dollar (AUD), and New Zealand dollar (NZD).Some notable examples of international currencies include the Brazil currency ( Brazilian Real), Korean currency (Korean Won), Thailand currency (Thai Baht), Turkey currency (Turkish Lira), Vietnam currency (Vietnamese Dong), Poland currency (Polish Zloty), Sweden currency (Swedish Krona), Denmark currency (Danish Krone), Indonesia currency (Indonesian Rupiah), Singapore currency (Singapore Dollar), Czech currency (Czech Koruna), South Korea currency (KRW), Egyptian currency (Egyptian Pound), Swiss currency (Swiss Franc), Hong Kong Dollar, Malaysia currency (Malaysian Ringgit), and Israel currency (Israeli Shekel)These currencies represent various economies with unique characteristics and are actively traded in the global foreign exchange market. Exchange rates for these currencies fluctuate based on economic factors, market conditions, and geopolitical events, shaping their values relative to other currencies.List of International CurrenciesTop 10 Strongest Currencies as of June 2023The US dollar is generally seen as the most powerful currency in the world and certainly the most traded currency in the global financial market. The USD is also the largest reserve currency in the world. However, the greenback is not the strongest of the fiat currencies recognized as legal tender worldwide.Based on their relative value against the US dollar, here are the top 10 strongest currencies in the world as of June 2023.How Do Exchange Rates Work?The exchange rates are the rates at which one currency can be exchanged for another. In other words, they represent the ratio between two currencies and determine the price at which one currency can be bought or sold in relation to another.Exchange rates are quoted in currency pairs, such as USD/EUR or GBP/JPY, indicating how much of one currency is required to purchase one unit of the other currency.Understanding exchange rates is crucial for sending money abroad, making investment decisions, and managing currency risk management. They reflect the economic factors and market forces influencing the demand and supply of a currency.Types of Exchange RatesExchange rates can be classified into two categories:FixedFloatingFixed and floating exchange rates are two different systems used to determine the value of one currency in relation to another.Fixed Exchange RatesIn a fixed exchange rate system, the value of a currency is set and maintained at a fixed rate against another currency or a basket of currencies. This rate is typically established and controlled by a country's central bank or monetary authority. Governments may choose to fix their currency to another currency, such as the U.S. dollar, or a commodity like gold.An example of a fixed exchange rate is that of the Chinese Yuan (CNY). The People's Bank of China (PBOC) maintains a fixed exchange rate for the CNY against a basket of currencies, with the U.S. dollar being the predominant reference. The PBOC intervenes in the foreign exchange market to manage fluctuations and keep the exchange rate within a predetermined range.Advantages & Disadvantages of Fixed Exchange RatesThe advantages of fixed exchange rates include stability and predictability in international trade and investment. They can promote confidence in a country's currency and reduce currency risk for businesses engaged in cross-border transactions.However, maintaining a fixed exchange rate requires significant intervention by the central bank and limits its flexibility to respond to economic changes.Floating Exchange RatesIn a floating exchange rate system, currency values are determined by market forces of supply and demand. The exchange rate fluctuates freely based on factors such as interest rates, inflation, economic performance, political stability, and market sentiment. Governments do not actively intervene to control or fix the exchange rate.For example, the United States has a floating exchange rate system, where the value of the U.S. dollar is determined by market forces of supply and demand. The Federal Reserve influences interest rates and monetary policy but does not actively intervene to fix the exchange rate.Advantages & Disadvantages of Floating Exchange RatesFloating exchange rates provide flexibility for currencies to adjust based on market conditions, allowing them to find their equilibrium levels. This system allows for automatic adjustments to external shocks and economic imbalances. However, floating exchange rates can be volatile, which introduces uncertainty for international trade and investment, as exchange rates can vary significantly over time.Mixed Exchange Rate SystemIt's worth noting that countries can choose to switch between fixed and floating exchange rate systems depending on their economic policies and objectives.Many countries today adopt a mixed exchange rate system, also called managed float system, that combines elements of both fixed and floating systems. In this system, the exchange rate is influenced or guided by government intervention to avoid extreme fluctuations. This approach aims to strike a balance between stability and flexibility.For example, India follows a managed floating exchange rate system. The Reserve Bank of India (RBI) actively manages the Indian rupee (INR) against a basket of currencies, primarily focusing on the U.S. dollar. The RBI intervenes in the foreign exchange market to smoothen excessive volatility and maintain orderly conditions.Factors Influencing Exchange RatesExchange rates are influenced by a variety of factors, including the supply and demand for currencies in the foreign exchange market. Economic indicators, such as inflation rates, interest rates, trade balances, and political stability, can impact the demand for a currency and consequently affect its exchange rate.Exchange rates are also influenced by market speculation and government interventions, as central banks may adjust interest rates or engage in currency market operations to influence the value of their currency.These factors can be summarized as follows:Supply and Demand: Like any other commodity, the value of a currency is influenced by the forces of supply and demand. If the demand for a currency is high relative to its supply, its value typically increases. Conversely, if the supply of a currency outweighs the demand, its value may decrease.Economic Factors: Economic indicators, such as interest rates, inflation, GDP growth, employment data, and trade balances, can significantly impact exchange rates. Stronger economic performance often attracts foreign investment and boosts demand for a currency, leading to appreciation: Strong economic growth, trade surpluses, and low unemployment rates can contribute to currency appreciation.Interest Rates: Higher interest rates in a country can attract foreign investors seeking better returns, increasing demand for the currency and potentially strengthening its value. At the same time, lower interest rates may discourage foreign investment and lead to currency depreciation.Inflation: Countries with higher inflation rates tend to experience currency depreciation as the purchasing power of the currency diminishes. On the other hand, countries with lower inflation rates may witness currency appreciation.Balance of Trade: A positive balance, with exports exceeding imports, boosts foreign currency reserves, allowing a country to lower interest rates, spur economic growth, and fortify its currency exchange rate.Public Debt: Public debt and its potential inflationary impact, as well as its deterrent effect on foreign investment, can devalue a currency.Current Account Deficit: The current account deficit is interconnected with the balance of trade, and arises when a country's expenses surpass its earnings. A greater current account deficit relative to a trading partner can diminish a country's currency value compared to that partner's currency.Political Stability: Political stability fosters investor confidence, attracts foreign capital, and strengthens a currency.Market Sentiment and Geopolitical Factors: Political stability, geopolitical tensions, and investor confidence are just a few examples of the factors that can affect market sentiment and, consequently, exchange rates. Positive sentiment can lead to currency appreciation, while negative sentiment can result in depreciation.Government Interventions: Governments possess a range of methods to manage their currency exchange rates. These strategies include adjusting interest rates, purchasing or selling foreign currency, influencing lending rates, printing money, and implementing additional measures. These interventions are typically done to maintain stability, support economic objectives, or address extreme fluctuations.Do Exchange Rates Matter When Sending Money Abroad?Yes. Exchange rates matter when sending money abroad. Being aware of exchange rates and seeking favorable rates can help ensure that you, as a sender, maximize the value of your transfer and provide your recipient with the most beneficial outcome.Top reasons why exchange rates matter when sending money abroad include:Value of the Transfer: Exchange rates determine the conversion of one currency to another. When sending money abroad, the exchange rate determines how much of the sender's currency will be converted into the recipient's cash. A favorable exchange rate can result in the recipient receiving more funds, while an unfavorable exchange rate can reduce the value of the transfer.Cost of the Transfer: Exchange rates impact sending money abroad. If the exchange rate is unfavorable, it means that the sender's currency will have a lower value when converted to the recipient's currency. As a result, the sender may need to transfer a larger amount of their currency to achieve the desired value in the recipient's currency, resulting in higher transfer costs.Timing of the Transfer: Exchange rates are subject to fluctuations due to various economic and market factors. The timing of the money transfer can significantly impact the exchange rate obtained. By monitoring exchange rate movements, the sender can choose a favorable time to initiate the transfer and potentially optimize the value of the transfer.Cost Comparisons: Different service providers offer varying exchange rates for currency conversions. Comparing exchange rates among different providers can help the sender find the most favorable rate, allowing for more value to be transferred to the recipient.How to Send Money AbroadSending money abroad involves several steps to ensure a smooth and secure transaction.Research Transfer MethodsThere are different methods for sending money abroad, such as bank transfers, online payment platforms, or remittance services. You can compare fees, exchange rates, and delivery options to choose the most suitable method for your needs.Collect Recipient InformationCollect the necessary information from the recipient, including their full name, contact details, and bank account information. Ensure you have accurate and complete details to avoid any delays or errors in the transfer.Choose a Service ProviderSelect a reputable service provider or institution to facilitate the money transfer. Consider factors such as fees, exchange rates, transfer speeds, and customer reviews when making your choice. Specialized money transfer companies are better than banks or other financial institutions, as they tend to have higher transfer costs, slower transfer speeds, and hidden fees.Initiate the TransferProvide the required information to the service provider, including your details, the recipient's information, and the amount you wish to send. Double-check all details for accuracy before proceeding.Pay for the TransferFollow the instructions provided by the service provider to pay for the transfer. This can usually be done through various methods such as bank transfers, credit/debit cards, or online payment platforms. Ensure you understand the fees and any additional charges associated with the payment.Confirm and Track the TransferAfter initiating the transfer and making the payment, the service provider will provide you with a confirmation or transaction reference number. Keep this information safe and use it to track the progress of the transfer. Most service providers offer tracking options to monitor the transfer's status.Notify the RecipientInform the recipient that you have sent them money and provide any necessary transaction details or reference numbers they may need to receive the funds. Advise them to monitor their account for the incoming transfer.ConclusionUnderstanding international currencies and exchange rates is important for anyone engaging in global transactions. Having a comprehensive knowledge of different currencies and their dynamics will empower you to navigate the complexities of the global economy more effectively.It is advisable to compare the available options before finalizing your decision when sending money overseas. While banks may seem convenient for international transfers, specialized money transfer providers offer superior exchange rates, transparent and affordable fees, and speed. Use the CompareRemit compare tool to view today's best exchange rates when sending money overseas!

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