Make the most of the currency situation

Living in a financial hotspot such as the UAE can have several advantages. Among them is the opportunity to make the most of currency fluctuations, keeping in mind that one's salary is credited in dirhams — a currency pegged to the US dollar.

Smarter methods

Some of the essentials for the financially savvy are dirham debit or credit cards that are tied to accounts in euros, pounds, Swiss francs, or even the Indian rupees, the South African rand or the Philippine peso.

Current accounts in these currencies allow for greater flexibility when arranging payments based on the best currency rate. For example, if you decide to move from a European country to the UAE, it's always advisable to maintain a local account that's tied to a euro credit card. To do so, make sure to inform your bank that you'll only be away from your home country temporarily. Always inquire about fees for international transactions and ATM withdrawals and always use your calculator.

Daily exchanges

Familiarise yourself with currency rates and monitor them at least twice a week. Make it a habit to keep track of the fluctuations of the dirham and compare it to the currency of your home country. Doing so will help you determine the right time to act.

For example, during 2008 the euro-to-dirham rate dropped significantly to Dh5.8 when compared to the euro. This proved to be the ideal time to transfer funds from Europe to the UAE, thereby increasing one's buying power. When the euro crisis begana year later, the dirham rate dipped to around Dh4.6 to the euro. With savings now worth 30 per cent more compared to the previous year, it was the perfect time to send one's savings back home.

For daily groceries and other smaller miscellaneous expenses, always pay with cash or a dirham debit card. However, larger lump sums such as annual rent require some planning ahead of time.

If there's a dip in the rate of the dirham, make the most of it by transferring funds from home and storing it in your local account to pay for the rent. Use this system for other equally large expenses such as buying a car or furniture. Keep an eye on thechanging rates when paying for flight tickets, holidays or school fees, while always using the bestapplicable currency.

Better deals

To avoid high international remittance costs, shop around for local banks that offer accounts in different currencies and apply the same system locally. However, not all of the currency accounts come with credit or debit cards and, last but not least, be careful about keeping the majority of your savings within the UAE.

Let your capital work while waiting for the best currency deals. Online savings accounts offer good rates throughout the UAE and at several banks abroad. Make sure your money is accessible anytime and don't be tempted into putting it into fixed-term deposits — you might miss out on a chance to take advantage of changing currency rates. n