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Hard vs. Local Currency

Institutions often debate the benefits and drawbacks of remitting payments in hard currency versus local currency in developing countries. StoneX Financial Ltd has extensive worldwide experience in both methods, and based on that experience, we believe that local currency payments serve our customers best. Here’s why:

Captive Client

By sending hard currency directly to the beneficiary bank for conversion locally, an organization potentially opens itself up to uncontrolled loss and relies on the local bank as its sole rate source. In many cases, the bank then converts the funds at the rate of the day, which is usually much less favorable than what can be attained by soliciting competitive bids. In fact, it is not uncommon for the difference to be as much as 5 percent – and, in some cases, even more. In addition, there are added fees associated with sending hard currency to be converted locally. As a result, it is more advantageous to fund in local currency, thereby ensuring access to competitive rates and maximum levels of funding for field projects.

Financial Controls

The financial markets and banking systems in many developing countries are inherently volatile and can be negatively impacted by political instability, corruption and perpetual underdevelopment. Therefore, maintaining large sums of hard currency in-country leads to many potential complications including misappropriation of funds, substantial country and credit risk, and an overall lack of accounting transparency. By transacting in the international market for local currency, the funding and accounting process is made more secure and accurate while reducing the potential for corruption and fraud.

Compliance Risk

Global compliance standards have been raised significantly in recent years. With the introduction of new laws and regulations in many countries worldwide, organizations must be aware of and adhere to current regulations regarding international currency transfers. By actively monitoring the currency exchange process from its head office, an organization can ensure not only that it is compliant but also that all financial dealings are undertaken with approved counterparties.

 


Meet the Team

London, England
Moor House, 1st Floor
120 London Wall
London EC2Y 5ET
Tel: +44 20 3580-6000

or

New York, NY
155 East 44th Street
9th Floor
New York, NY 10017
Tel: +1 (212) 485-3549
Toll Free: +877 279-9198

or

Singapore
One Raffles Place
#12-62 Tower 2
1 Raffles Place
Singapore 048616
Tel: +65 6309 1000

The information in this section is intended to be a description of the StoneX Global Payments services and shall not be deemed to be an offer for the sale or purchase of any financial services product transaction or advice. It is provided on an ‘as-is’ basis and no warranty, whether express or implied, is given as to its completeness or accuracy.

StoneX Global Payments is a service provided by StoneX Financial Ltd, registered in England and Wales Company Number 5616586 and authorized and regulated by the Financial Conduct Authority (FCA) [FRN: 446717]). SFL provides its Global Payments services across the globe using its agents; StoneX Group Inc., in the United States and INTL Asia Pte Ltd, in Singapore.

StoneX Financial Ltd and StoneX APAC Pte. Ltd. are part of the StoneX group and wholly owned subsidiaries of StoneX Group Inc. StoneX Group Inc. is a public company, registered in the United States of America and regulated by the Securities Exchange Commission. It is listed on the NASDAQ stock exchange (ticker symbol "SNEX"). StoneX is the trade name of StoneX Financial Ltd.

INTL FCStone Pte Ltd (Co. Reg. No 201130598R), a subsidiary of StoneX Group Inc., holds a Capital Markets Services Licence regulated by Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. INTL FCStone Pty Ltd (ABN: 2006580694) holds an Australian Financial Service License and is regulated by the Australian Securities and Investments Commission (AFSL: 237755). INTL FCStone (HK) Limited (CE No.: BCQ152) is regulated by the Hong Kong Securities and Futures Commission for Dealing in Futures Contracts. ’StoneX’ is the trade name used by StoneX Group Inc. and all its associated entities and subsidiaries.

 

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