Global events may even be the start of your migration plans. Many migrants move overseas in order to benefit from changes in economic conditions elsewhere or to escape the employment or financial constraints of their home country.  Even as I write, the argument is raging over whether those in Bulgaria and Romania who want to improve their financial lot should be allowed into Britain when these countries accede to EU membership in 2007. The rights or wrongs of the argument don’t and can’t alter the desire that we all feel to improve our circumstances but the same politicians who are doing battle on this matter might also affect your own migration plans in less obvious ways.

When it comes to moving internationally, the exchange of your funds from one currency to another, a matter which looks so very simple from the outside, will be directly affected by the words of those politicians or the speech from someone in authority in another country.

You see, the currency market from whence your funds are derived, is directly influenced by the words and deeds of political and financial figures who only get reported in the depths of the financial pages; pages, by the way, which you are well advised to avoid if you want to stay awake.

A central bank which is in the throes of increasing the interest rate it offers on investments will attract investors and strengthen the domestic currency, making it more expensive for those who wish to buy it. A country which embarks on a strategy of economic expansion through lower interest rates might find that, for a short period, their currency is actually weaker due to the lower interest rate yield but that will change when the economy starts to heat up and interest rates begin to rise to ease consumer demand.

If GW Bush decides to wage more war, retreat from a war zone or even remove himself from office, the markets will interpret the consequences of his actions for the US economy and the effect that this will have globally and then either buy or sell their US Dollar holdings accordingly. However, the US Dollar seems to be rather attractive at all stages of their economic cycle and whatever is happening on the political front because of the sheer demand from US consumers.

Knowing whether the news is likely to strengthen a currency, weaken it, leave it on hold, where the economy is within its cycle and where the currency markets are likely to move to next, is the domain of the financial professional so enlisting their help makes prefect sense. After all, you are already involved in a momentous learning curve, understanding all the ins and outs of legal, tax and visa requirements for your planned move; do you really want to have to learn everything about the currency market as well?

And converting your funds looks pretty simple because most people will just amass the funds from the sale of their house, car and non-exportable possessions and then ask their bank to send the money to their new country. Easy; nothing complicated about that and the funds will be delivered in the new currency as instructed. The bank will charge a small fee and you move on to your new life.

But the small fee is a bit of a red herring because the bank will also have made rather a handsome profit from your funds and this comes in the form of a spread.

A spread is the difference between the exchange rate offered by the bank to those who are planning to sell them a currency and the exchange rate they will apply to contracts where that same currency is being bought from them. As an example, check the Tourist rates on the screen at your nearest bureau de change or bank foreign exchange till when you are next there. The Sterling – US Dollar exchange rate will show something like $1.80 on the ‘We sell at’ side of the screen whilst the ‘We buy at’ side will show $2.03. That gives the bank a profit of 10 percent on each US Dollar that they buy and sell.

On cash transactions, it could be argued that this is justifiable because cash is so expensive to handle; security, counting, storing etc. all cost money and time and the banks and bureaux will always be able to argue their costs force the gap between the buy and sell prices apart. However, when it comes to an international transfer, all the funds are moved electronically and the only manpower issues are the checking and authorising of payments. You would, therefore expect the exchange rate spread to be rather less dramatic than the 10 percent on the tourist rate screens. 

Assume nothing, question everything, as James Patterson wrote; if you don’t ask the bank what exchange rate you are getting, (and most people don’t), there is no incentive for them to reduce their profit margin at all. In fact, even if you ask the exchange rate, they may not tell you because in many cases, the rate is set when the funds are released and not before. That might be two or three days later and the market can move two or three percent in even this short space of time.