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Created on 30.01.2020

Foreign exchange transactions: benefit from ups and downs in foreign currencies as a private individual too

Purchasing and selling foreign currencies is not just beneficial for companies. Foreign exchange transactions can also be worthwhile for private individuals – like early booker Melanie Müller. Here’s what you need to know.

Melanie Müller likes planning things in advance – such as her holidays, which she will spend in her favourite country, France, with her whole family again this year. A year ago, she booked a cottage for the four of them to stay in for two weeks. She is just as far-sighted when it comes to her money as she is with her travel plans. Knowing that she regularly pays amounts in euros, she purchased euros at an attractive rate some time ago. She wants to pay the bill for the property rental today, and can now do so with this money from her private account in euros. 

The advantages of foreign exchange transactions

Melanie Müller does the same thing in her private life as companies do as part of their business: she buys and sells foreign currencies to hedge against currency risks and benefit from ups and downs in foreign currency values. If the rates had gone down, she would have had the option of selling the euros again. Purchasing and selling foreign currencies at a certain rate without setting the date in advance, otherwise known as a spot transaction, is the simplest example of foreign exchange transactions. To do so, you need to have a foreign currency account in the relevant currency. 

Who can benefit from foreign exchange transactions

It is not only companies in Switzerland that are becoming increasingly international. Private individuals are also entering into more and more business relationships abroad – thereby exposing themselves to currency fluctuations. This means that spot transactions are becoming more interesting for private individuals. They represent an interesting opportunity for anyone who pays for goods or services abroad by invoice on a regular basis, whether in store or online. They then settle the invoice amount directly from the relevant foreign currency account without currency risks. 

At PostFinance, the following nine foreign currencies can be exchanged:

  • AUD (Australian dollar)
  • CAD (Canadian dollar)
  • DKK (Danish krone)
  • EUR (Euro)
  • GBP (Pound sterling)
  • JPY (Japanese yen)
  • NOK (Norwegian krone)
  • SEK (Swedish krona)
  • USD (United States dollar)

How to purchase and sell currencies

The principle is simple: you “feed” a foreign currency account with cheap money so that you can pay bills directly in the foreign currency when the time comes or withdraw cash directly from your private account in euros. The important thing is to carefully monitor the foreign currency market and to trade at the right time. The main reasons for the appreciation and depreciation of currencies are the economic development of a country and its monetary and interest rate policies. Once you have made your decision, you can purchase currency over the phone (tel.:  +41 58 338 11 01) or, for amounts between CHF 5,000 and CHF 50,000, directly in e-finance.

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