For example, let’s say that you intend to exchange £10,000 for CA dollars. You look at today’s pound to Canadian dollar exchange rate, and it’s 1.50, which means that for £10,000 you’ll get CA$15,000.
However, you then look at the exchange rate tomorrow, and see that the pound has risen to 1.60 against the CA dollar. This then is the best time to buy Canadian dollars, because for your £10,000, you’ll now get CA$16,000, or +CA$1,000 more than yesterday.
It’s important to note that there’s no day of the week or time of year when it’s the best time to buy Canadian dollars. The Canadian dollar isn’t stronger or weaker depending on whether it’s Monday or Friday, or January or July.
Instead, the Canadian dollar fluctuates depending on Canada’s economic and political outlook. To be specific, the CA dollar weakens when Canada’s outlook looks worse.
For example, if Canada’s economy shrinks –0.3% in Q1 2017, this would drag down the Canadian dollar. This then would be the best time to buy Canadian dollars, as you’ll get more of them.
With this in mind, to find the best time to buy Canadian dollars, it’s best to start looking at the exchange rate well before you need your Canadian dollars. This is because this gives you the biggest possible window for Canada’s economy to take a turn for the worse, so the Canadian dollar weakens, meaning you’ll get more of them.
For example, if you intend to emigrate to Canada and plan to transfer £10,000, you could start looking at the exchange rate 6 months or a year before you plan to go. This way, you give yourself the biggest window to find the best time to buy Canadian dollars.
What’s more, if you’ve found the best time to buy Canadian dollars, but don’t yet need your Canadian dollars, you could fix your exchange rate.
For example, let’s say that you intend to emigrate to Canada next year, and see that the exchange rate has hit 2.10 today, which would be its highest in the last 5 years. In this case, to lock in this best time to buy Canadian dollars, you’d set up a forward contract, to secure this exchange rate.
Hence, even if the exchange rate falls next year, when you emigrate, you’ll still get the best Canadian dollar exchange rate that you’ve already fixed.
With these tips in mind, you’ll find the best time to buy Canadian dollars!
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