04 Nov 2023
The people of Ghana endure immense financial suffering, at times due to being jobless, and at other times, due to earning less than required. It perpetuates the cycle of acute poverty, which pushes them to travel abroad to earn a living. They send money to Ghana from overseas to help their families fulfil financial needs, which they cannot do because of not being financially viable.
This shows that it is the grave financial challenges that push Ghanaians out of their native country.
About 4 million people from Ghana are living in foreign countries largely to earn a living and make significant financial contributions to their country’s economy.
A World Bank report said that the remittances Ghanaians sent back in 2022 amounted to $4.66 billion.
Although Ghanaian migrants support their families financially on an individual basis, the cumulative monetary effect on the economy is extremely positive and impactful.
So, when they earn in a foreign land, they tend to save money because they know that if they do not save, they will soon be back to their financial square one, which is the point from where they begin their financial journey.
They try to slash their expenses as much as they can during their stay abroad. Fine so far.
But do you know there is one area in which they have to incur expenses whether they like it or not? What is that area? Remember that sending funds back home to offer financial support is inevitable for Ghanaians working abroad.
You guessed it right!
It is sending money back home. And it is an expensive exercise because of the fees and currency exchange rates involved.
Of these two factors, the most critical one is the currency exchange rates.
This blog will explain exchange rates and their impact on your online money transfers to Ghana from abroad.
A currency exchange rate is the rate at which one currency is exchanged for another currency. It is the rate at which you purchase or sell another currency.
For example, you are working in the UK as a Ghanaian migrant and send, say, 100 GBP in a money transfer to Ghana.
The recipient of these 100 GBP cannot use the British currency in Ghana. Right?
So, what do you do? You simply convert those 100 GBP into Ghanaian Cedi (the currency of Ghana) and spend money.
The rate at which you will sell these 100 GBP is the currency exchange rate.
On today’s date (Sunday, July 23, 2023), this rate is 1490.40 Cedi.
This means that you will get 1490.40 Cedi for 100 GBP. And if you narrow it down, you will get 0.067 GBP for 1 Cedi.
But there is the reverse rate currency exchange rate too.
It is when you want to purchase 100 GBP. This is what you need when you have to travel to the UK from Ghana. You will need the British currency, which you need to spend in the UK on arrival.
So, if you buy British Pounds for 100 Cedi, you will get 6.82176 GBP.
Therefore, the selling and purchasing exchange rates are always different.
Apart from the difference between the rates at which you will sell and purchase a currency, these rates have the following three types:
The first type is the floating or fluctuating currency exchange rates, employed by the strongest currencies such as the USD and is determined by supply and demand.
The second type is the managed float exchange rate, which is determined by a country’s central bank to ensure fluctuations do not impact it. It is also known as ‘Pegged float’
The third type is the fixed exchange rates, which are tied to another currency and fluctuate only when the stronger currency fluctuates, not otherwise.
All of these currency exchange rate types have their advantages and disadvantages, but remember that you should find a service provider that offers you live and fluctuating currency exchange rates for your online money transfer to Ghana because it gives you a chance to get the best deal on your money transfers at your convenience.
Now let’s help you find the best deals and the best currency exchange rates, whether you check these rates before your transfer or not.
It does not bother you what factors impact currency exchange rates. Right? But if you look for the following features in a service provider, you will likely get the best deals given the core purpose of saving money on money transfers.
Some money transfer companies, including ACE Money Transfer, will offer you live exchange rates. This is unlike the banks whose rates are fixed, at least for 24 hours, if not more.
These fluctuating rates give you a chance to initiate a transaction at a time when rates are at the highest and in your favour.
It is worth remembering that exchange rates, by default, keep fluctuating in the international market.
Another important factor is how a company will charge you. Some service providers charge you a high fee regardless of the amount being processed. At the same time, others will charge you a fraction of the amount being sent.
Some companies, however, set a limit for charging fees. This means that if your money reaches that limit, you will be charged, but if it remains below that limit, your transfer will likely be free.
Find a service provider that offers you speed and safety in your online money transfers without charging you extra. Otherwise, you might have to pay extra if you wish to deliver funds faster than the normal speed.
Wider service access and availability is an area that can burden you financially. Because if you have to commute to a service provider’s office, as is the case with banks, you will incur expenses. However, a service provider with wider access and virtual service availability can help you save money.
Currency exchange rates can sway your transaction either towards financial loss or financial gain. So, ensure that you send money to Ghana online with ACE Money Transfer to get all the benefits listed above and much more from one window that will help you with your savings abroad and smooth money transfers back home.
Ans. The currency exchange rate is the rate at which you purchase one unit, or many units for that matter, of another currency. These keep fluctuating, and the rate at which you buy another currency differs from the rate at which you will sell the same currency.
Ans. The three different types of currency exchange rates include floating or fluctuating currency exchange rates, managed float exchange rates, also known as pegged float, and lastly, fixed exchange rates.
Ans. The best exchange rate type for you is the fluctuating rate because it allows you to initiate a transfer when the rates are at their highest and move in your favour.
Ans. Checking currency exchange rates is essential before initiating a transfer because a) these keep fluctuating and b) checking exchange rates can offer you the best deal on your money transfer as you might have to wait a while before initiating a transfer so that these rates move in your favour if they are not at the time of checking.
Ans. The factors impacting currency exchange rates include inflation differentials, interest rate differentials, current account deficits, public debt, trade terms, economic performance, and demand and supply.