#36 Amazon currency conversion – Jenny Shao of Currencies Direct
Jenny Shao of Currencies Direct (affiliate link) has a deep background in the business of Foreign Currency Dealing. Handling Currencies is not a matter just for large firms or hedge funds – if you are UK based and sell in the USA or Europe, it affects your Profits very directly and can make BIG differences!
Jenny talks us through the nuts & Bolts of saving money & time, and protecting yourself from currency fluctuations- or even benefitting from them.
SHOW NOTES FOR EPISODE #36
Jenny Shao Interview:
What is Currencies Direct (affiliate link)? What do you do?
A Money service Provider.
What is a currency exchange as compared to a bank?
It’s very similar but more focusses on SME (Small and Medium Enterprises)
What are the main dangers/things to look for in currency exchanging?
Exchange rate inward and outward. To overcome these:
-Use a collection account for inward payments
-Use a competitive rate for outward payments
Can you tell us more about collection accounts?
-Try to get a segregated account so your account is not put at risk if Amazon rejects other sellers
-You can autowithdraw regularly – but sometimes it’s best to leave the money in this account and convert it later to take advantage of FX movements
Is this okay with Amazon?
Yes Amazon, if pushed, will officially recommend Currencies Direct.
What are the main issues to look out for when paying Chinese suppliers?
In the time between when invoice is issued and payment due, exchange rate could have move significantly. To help, use forward contracts
What is a forward contract?
Lock in today’s exchange rate but do the actual payment at a later date.
What is Currency Direct’s Charging structure?
0.1% receiving fee, Conversion fee of 1-2%, and Transfer cost of £10.
How fast can you get payments from Amazon.com back to UK?
Next business day (click here for more details)
How fast can you get USD from UK to Chinese suppliers?
Next business day from UK to US bank account. Then up to the bank to send the USD to Chinese suppliers.
Bigger picture questions:
What is the future for USD/GBP next 3-6 months?
The pound fell across the board yesterday, As it continued to fight an uphill battle against the impacts of a possible Brexit [British Exit from the European Union]. Whilst uncertainty about the outcome of the vote still lingers, the pound is struggling to find support, and continues to move lower. We can expect further volatility as we approach closer to the date.
How about the Euro?
Some may say that the pound was overvalued in 2015, particularly against the euro and to some extent the US dollar. The pound was driven up due to the complete lack of confidence in the euro zone and the decision by the Fed not to raise interest rates until late last year. This overvaluation caused UK exports to fall which in turn put pressure on the construction and manufacturing sectors. The Bank of England then had to change their stance and have been actively talking down the UK recovery, With the hope this would artificially drive standings value down and boost vast facet of our economy.
Jenny feels it is likely things will get worse before they get better and whilst the current trend won’t last forever, the key question is where we finally see the pound bottom out. Look to protect yourself against further losses
What is the Chinese economy outlook over the next year or so?
Beijing posted its slowest economic growth in a quarter century last year as it grappled with a tough transition away from dependence on heavy industries towards less labor intensive industries. This has benefited other countries such as Vietnam which has benefited from taking over low-level production from its giant neighbour.
The ADB’s flagship Asian development Outlook 2016 full full cost that China’s economy would grow at 6.5% this year and 6.3% next year.
As China focuses more on consumer driven growth they welcome sellers from abroad to provide buyers with more choices. This makes it even more important to manage your foreign exchange to better compete with domestic sellers [in China] and make the most of this growing market.
How do listeners find out more about Currencies Direct?
Just go to their website to set up a collection account: Currencies Direct (affiliate link)
Or email Jenny Direct: email@example.com
Do you have any parting words of advice?
Thinking of selling overseas? Have a look at your existing data [if any]. Use common sense – the advantages of the USA: same language and established buyers. Selling fashion? – try France!
Decide on country. Search their marketplaces like Amazon, eBay. How is the competition? Is their price very different from yours? Are they providing a different variety of product?
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