Exchange rates...? We've got you covered.


 

If you’re like most people, there is something about exchange rates that always seems cryptic. If you’re not working with currencies every day, it’s difficult to remember what to multiply, what to divide etc.

Fluctuating exchange rates can have a significant impact on your program budget. The exchange rate in effect when a contract is signed will likely not be the rate at time of the event, especially if you are booking several years in advance.

We are aware of Canadian companies who have lost between $25,000 and $300,000 due to a US exchange rate which was 1.25 upon initial sale and increased to 1.40 at time of travel. 
Here are a few tips to demystify exchange rates for you.

Tip #1: 

For a sample rate shown as “EURO/USD = 1.17003”, the currency on the left (EURO) represents 1 of what you’d like to buy.
 
The currency on the right (USD) represents how much it will cost to buy 1 of the currency on the left (EURO). 
 
So, if the EURO/USD rate is 1.17003, that means it will cost you $1.17003 USD dollars to buy €1.00 EURO.
 
If the hotel proposal you’ve received is for €200,000 EUROS, multiply €200,000 by 1.17003 (the EURO-USD rate quoted above) and you get $234,005.76 USD dollars.

Tip #2: 

Exchange rates vary minute-to-minute, day-to-day and week-to-week so the exchange rate you use to build your event budget today will most likely not be the rate in effect when you start making payments. 

You have several options:

1.    Build in a healthy contingency buffer (20%-30%) in case the EURO-USD rate goes in the “wrong” direction (i.e. it costs more than $1.17003 USD dollars to buy €1.00 EURO)
2.    Purchase a foreign currency contract (a “hedge”)
3.    Use Meeting Escrow’s foreign currency trust service to convert your budget to EUROS immediately and lock in today’s rate (shameless promotion we know but it really works!). Eliminate the financial worries and surprises so that you can focus what you're good at versus mitigating financial losses. Read more here.

For everything you need to know about exchange rates, read more detail at this great Investopedia article.

Posted: 7/10/2018 10:10:30 AM by Meeting Escrow Blog | with 0 comments


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