Ahead of the EU referendum, parts of the retail foreign-exchange business are preparing for potential market shocks when the results are known.
With the pound strengthening in the past few days, the length of queues at London bureaux de change suggested holidaymakers are acting like businesses - hedging their holiday money needs against the risk of Brexit. Thomas Exchange Global was selling US dollars at just under $1.45 to £1, with the Euro just above €1.28.
If there is a Leave vote, many economists say, sterling will plunge against all major currencies. But a majority for Remain could see the pound surge in value.
MoneyCorp, one of the largest providers, has reduced its exposure to sharp swings in the value of the pound by temporarily switching off its online service allowing travellers to pre-book currency for collection at airport outlets and London bureaux de change. The firm blames “current market volatility”, and says it is “unable to confirm when our collection service will resume.”
Travellers who are are travelling imminently can take advantage of online rates “by quoting the word ‘reserve’ at any of our branches,” says MoneyCorp.
In contrast, HifX, says it will be “open for business throughout the referendum 24 hours a day.”
Foreign-exchange providers could find their currency reserves increasing in value if the pound slumps, or dwindling if sterling strengthens.
It appears that some firms want to pre-empt the possibility that a customer could “lock in” to a particular rate, then decide whether or not to proceed with the purchase depending on the currency markets.
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