Learn how to find the best* AUD/EUR exchange rate when you want to send money to Europe in our guide.
If you need to send an international money transfer to Europe, finding the best* exchange rate is critical to ensure value for money. However, to lock in the best* rate, you’ll need to understand how exchange rates work and be able to monitor the performance of the EUR against other global currencies.
As well as choosing the best time to send your transfer, you will also need to compare transfer providers to find the company that offers the best* AUD/EUR exchange rate. Read on to learn how to get the best deal when you want to send EUR overseas.
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Definition: Best* exchange rate
There is no single best exchange rate, and the best exchange rate for you may not be the best for someone else. This is because there are other factors to consider when sending an international money transfer in addition to the exchange rate, including the transfer fees, the payment method, the speed of delivery and the level of customer service. One person may need to transfer money within 24 hours, while others may have no time frame, which may affect the exchange rate. Exchange rates are also affected by wider economic factors. Previous performance isn't an indication of future performance. You should consider a range of products when deciding which provider is most suited to your personal money transfer needs.
History of the EUR
The euro (EUR, €) is a common currency shared by 19 European Union (EU) member states. Introduced in 1999, the EUR is now the major currency for over 337 million EU citizens and is the second-most traded currency in the world.
The following countries have adopted the EUR: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Portugal, Slovakia, Slovenia and Spain. However, not all EU member states use the EUR as their official currency, with the United Kingdom and Denmark employing opt-out clauses that exempt them from participation.
On 1 January 1999, the national currencies of participating countries in the Eurozone ended their independent existence. The EUR was originally introduced in non-physical form, such as electronic transfers and traveller’s cheques, but new EUR notes and coins were introduced at the start of 2002.
The EUR has since become the second-largest reserve currency and the second-most traded currency in the world, after the US dollar (USD) in both cases. In addition, more than 200 million people in 20 countries and territories around the world use currencies that are pegged to the EUR.
EUR exchange rates
The European Central Bank (ECB), along with the national central banks of Eurozone nations, hold responsibility for the Eurozone’s monetary policy. Individual national authorities retain control over structural and fiscal policies, but they have to work in tandem to attain common objectives surrounding stability and growth.
The EUR follows a floating exchange rate system and has seen substantial fluctuations against other global currencies throughout the 21st century so far. The table below takes you through the value of the euro against some major currencies since 2000.
|January 2000||January 2005||January 2010||January 2015|
|USD (US dollar)||1.0312||1.3465||1.4326||1.2104|
|GBP (British pound)||0.6299||0.7069||0.8860||0.7786|
|AUD (Australian dollar)||1.5741||1.7314||1.5966||1.4793|
|JPY (Japanese yen)||106.48||138.31||133.26||145.00|
|CNY (Chinese yuan)||8.5349||11.1426||9.7803||7.5119|
The EUR has historically traded at a much higher rate relative to the AUD. In the period from 2002 to September 2015, the AUD traded at an average of €0.65. The AUD reached its highest points of €0.86 in July and August 2012 when the Eurozone battled a recession brought on by the global financial crisis. This caused the value of the EUR to fall against most major currencies around the world.
Factors that affect the value of the EUR
An exchange rate is quite a complex figure. There are many competing factors that can have an impact on the value of a currency, including everything from consumer sentiment and unemployment rates to interest rates, imports and exports, and the supply of and demand for that currency.
For example, despite the fact that Greece contributes only 2% to the Eurozone’s total economy, the recent Greek debt crisis, which came to a head in the middle of 2015, has had a significant impact on the value of the EUR. From trading at around US$1.32 to $1.33 in August 2014, the EUR plummeted to around US$1.10 by June 2015.
Another example of how global developments can affect the value of currencies occurred when the UK voted to leave the Eurozone in June 2016. Fears surrounding the economic implications of the Brexit vote saw the EUR/USD exchange rate fall from US$1.13 on 23 June to US$1.10 on 27 June.
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When is the best time to transfer money to Europe?
The best time to send an international money transfer to Europe is when the AUD/EUR exchange rate is at its peak. In other words, the best time to transfer is when the AUD is valued at a high rate relative to the EUR.
The problem is that there are myriad factors that can affect the value of the AUD/EUR exchange rates, including developments in Australia, across the Eurozone and even on a global scale. Taking this into account, it can be difficult to work out when an exchange rate is set to rise or fall, and therefore whether now is a good time to transfer.
However, you can take a few simple steps to maximise your chances of getting the best* rate for your AUD to EUR money transfer. Keep an eye on economic developments in Australia, in the Eurozone, and in other areas that could have a global financial impact. For example, a change to interest rates, the announcement of jobs figures, a national election or news on a country’s rising debt problem could all affect the exchange rate. You can also check media reports and broadcasts for economists’ predictions of the future performance of the Aussie dollar.
It’s also worthwhile examining the historical performance of the EUR and the AUD/EUR exchange rate. This will help you identify trends and economic and political developments that will have an impact on the value of the EUR, which in turn can help you identify the best time to send money to Europe.
As you can see in the graph charting the recent history of the AUD/EUR exchange rate below, the best times to transfer AUD to EUR in the year preceding 24 November 2016 were:
- In April 2016, when 1 AUD = 0.68 EUR
- In August 2016, when 1 AUD = 0.69 EUR
- In November 2016, when 1 AUD = 0.70 EUR
Conversely, the worst times to send money to Europe were in January and February, when 1 AUD dropped to just 0.62 EUR, and in May when 1 AUD = 0.64 EUR.
* Screenshot taken from xe.com on 24/11/2016
Charlotte times her transfer
Charlotte is a Belgian expat who settled in Melbourne three years ago. She loves her new home in Australia, but she still maintains plenty of ties to her mother country, including to her former business partner. Charlotte needs to send a transfer of EUR2,500 from Australia to Belgium to pay off a longstanding debt, but as there’s no strict payment deadline between the two old friends, she decides to wait until the AUD/EUR exchange rate peaks.
Charlotte initially plans to send the transfer in February 2016, but after tracking the history of the AUD/EUR exchange rate, she realises that the 1 AUD = 0.62 EUR on offer is quite low. A couple of months later in April, 1 AUD is worth 0.68 EUR, which represents much better value for money. Alternatively, had Charlotte waited until November to send the transfer, she could have taken advantage of an exchange rate of 1 AUD = 0.70 EUR.
As you can see, simply by sending her transfer in November when the exchange rate peaked, Charlotte could send a whopping AUD$461 less than if she had sent it in February – and her old business partner would still receive the EUR2,500 needed to pay off the debt.
|February 2016||April 2016||November 2016|
|Exchange rate||1 AUD = 0.62 EUR||1 AUD = 0.68 EUR||1 AUD = 0.70 EUR|
|AUD needed to transfer EUR2,500||$4,033||$3,677||$3,572|
Why you need to choose the right money transfer provider
Once you’ve chosen the best time to send an international transfer to Europe and get the best* exchange rate, you also need to choose the right money transfer provider to handle the transaction.
Transfer companies use two methods to make money:
- They charge transaction fees. Some providers charge a flat fee, such as $10 or $15, while others calculate their fee as a percentage of your total transaction amount.
- They add a margin to the exchange rate. Transfer companies purchase foreign currency at the mid-market exchange rate, but then sell it on to their customers at a lower exchange rate. For example, if your bank purchases EUR at a rate of 1 AUD = 0.70 EUR, it might sell those euros on to you at a rate of 1 AUD = 0.66 EUR.
However, transfer fees and exchange rate margins are not the same across the board. In fact, you might be surprised to learn just how widely they can differ, which is why it’s important to compare money transfer providers to get the best deal.
For example, you could choose to send the money straight from your Australian bank account to a bank account in the Eurozone – after all, this would be the most convenient option. However, banks are notorious for offering paltry international transfer exchange rates to customers, so you’ll be able to find much better exchange rates elsewhere.
Cash transfer companies like Moneygram and Western Union can help you send cash from Australia to Europe within minutes, but their transfer fees can be high and their exchange rates can sometimes leave a little to be desired.
The best* EUR exchange rates and lowest transfer fees are provided by specialist online transfer companies. These providers, such as OFX and Currency Online, are experts at moving money internationally. You’ll have to sign up for a free account to use their services, but once you’re registered you can find the highest AUD/EUR exchange rates around. Transfer fees also tend to be minimal, while some companies waive their fees on large transactions.
Shopping around for value for money
Charles is a Parisian who has been posted to Sydney to work for two years. To provide financial support for his ageing parents, Charles decides to transfer AUD$2,000 home to Paris once a month. To find the best value for money, he compares a range of transfer options – a major Australian bank with which he already holds an account, a cash transfer company and two online transfer providers.
The results of his comparison are shown in the table below. As you can see, the two specialist online transfer companies offer much better exchange rates than the other two providers. The company that offers the best deal is online transfer company 2, which allows Charles to send an extra EUR72.87 to his parents when compared to the bank, and also saves him AUD$8.10 in transfer fees.
|Bank||Cash transfer company||Online transfer company 1||Online transfer company 2|
|Exchange rate||1 AUD = 0.6585 EUR||1 AUD = 0.66093 EUR||1 AUD = 0.68 EUR||1 AUD = 0.6998 EUR|
|Amount sent (in AUD||$2,000||$2,000||$2,000||$2,000|
|Total cost of transfer||$2,022||$2,080||$2,005||$2,013.90|
|Amount received (in EUR)||€1,317||€1,321.86||€1,360||€1,389.87|
How to compare money transfer providers
If you’re looking to send an AUD to EUR international money transfer, keep the factors below in mind when comparing money transfer providers.
- Exchange rates. Compare several transfer providers to find out which one offers the best exchange rate for EUR. Even if the difference in rates between two providers seems relatively minor, this can actually make a huge impact on your bank balance when transferring hundreds or even thousands of dollars overseas.
- Transaction fees. The fee attached to your transfer is another important cost to consider. Some providers with high exchange rates also charge high fees, while some companies waive their fees on large transfers.
- Sending and receiving options. Check out the transfer methods each provider offers: online, over the phone, by visiting a branch and/or by using a smartphone app. How will your beneficiary in France receive the money: as a bank account transfer or by picking up cash?
- Transfer options. If you need to send regular payments, check to see whether each company allows you to set up recurring payment plans. Other flexible options, such as forward contracts and limit orders, can help you lock in a better exchange rate with a minimum of fuss.
- Customer support. Make sure you will be able to easily access advice and assistance if you ever have a problem with a transfer.