You would have thought about the cost you have to bear to send money to Pakistan from the United Kingdom. This article throws light on the cost of transferring Pound Sterling to Pakistan in its local; currency, PKR. People of Pakistan find the United Kingdom to be a favourite place to visit for better job opportunities. It is mostly the case with the third world countries whose weak economies the low value of their currencies pushes people out of the countries to go to the stronger economies with high currency value.
These currencies, when converted into the local currencies, they make up huge amounts due to the difference in the currency exchange rates. Through this practice, the expatriates ensure a financially secure future for themselves and their families.
As far as the question of the cost of money transfer to Pakistan in GBP to PKR is concerned, it depends on the cost of sending, currency conversion, and a few other factors discussed below.
Rate of inflation:- A low inflation rate in a country will result in its currency’s appreciation in value as compared to a country with a higher inflation rate. In England, the inflation rate is low, and in Pakistan, it is high. This difference in inflation rates influences the currencies at the time of conversion. Therefore, it is important that the currency should be exchanged at a time when inflation stabilizes in the recipient’s country. This will help you have access to better exchange rates.
Rate of interest:- An increased interest rate causes the value of a currency to appreciate. These interest rates fluctuate. So, observing these rates and trying to convert currency at a time when the interest rates are at a peak can help you with better exchange rates.
Balance of payment:- As is the case with Pakistan, it spends more on imports than it earns through exports. It causes a trade deficit which results in currency depreciation.
Government debt:- This debt is also known as the public debt or national debt. A country’s central government owns it through its central financial regulatory authority, which in Pakistan’s case is the State Bank of Pakistan (SBP). A country with huge public debt will be unlikely to invite external or foreign capital. It affects the currency exchange rates negatively. This is also one of the reasons expatriates have to pay extra money to send money to Pakistan online and even more when you go to a bank for a transaction.
Terms of trade or (ToT):- Simply put, the ratio of export prices to import prices is called the ToT. It increases if exports rise faster than the imports; or if export prices rise faster than the import prices. If this happens, it raises a currency’s value which ends in an increase in exchange rates.
Political stability: A politically unstable country will not attract foreign investment and foreign capital flow. But a politically stable country will attract foreign capital, which stabilizes the currency and appreciates its value.
Recession:- A famous economist once said that an economic recession is where a policy works and economic depression is where it does not. A country’s currency will devalue, and its exchange rates will fall if it undergoes an economic recession.
Speculation:- An exchange rate will increase, and currency will appreciate if investors have positive speculation about a certain currency.
These are some of the important factors that you must keep in mind if you want to have the best exchange rates. But, all of these factors are beyond your individual control.
Here is, however, a list of factors that are well within your control as individual planning to send money to Pakistan as an expatriate.
Transfer speed:- There are different types of transferring GBP to PKR. If you use the traditional wire method, it will take about three to five business days. But if you send money through online money transfer companies such as ACE, you will have two options; one, to send money at normal speed; and two, to send it on an urgent basis. There are a few companies that will charge you extra for a speedy transfer, but ACE does not charge extra. Rather, ACE’s normal transfer speed exceeds other companies’ urgent pace.
Safety:- You are particularly conscious about matters involving money. A weak security mechanism can deprive you of your money. But, a few companies, such as ACE, offer tightly secured online money transfers to Pakistan and worldwide.
Low fee:- You look for companies that offer low fees for transferring funds. With low fees, you can ensure that the principal amount remains the same on reaching the beneficiary.
The convenience of collection:- ACE has a deep working liaison with many banks dotted across different countries worldwide, through which customers can initiate transactions. And it creates ease of commuting for its customers against other companies whose services are limited and restricted.
Conclusion:- We have seen the factors that affect the exchange rates on a macro level which are beyond our individual control. We have also studied a few important factors which affect our cost of sending GBP to PKR, which are well within our individual control. Keeping an eye on all of these factors with deep observation can help us cost-effectively have the best exchange rates.