# Currency Protection



## CheersMate22 (Jan 22, 2008)

I am moving to Surrey, England at the end of March and am in the final negotiations regarding my relocation package.

One item that my two American ex-pat friends have in place is "currency protection". With the US Dollar at an extreme low vs. the GBPound, and a recession on the horizon, I feel that this is critical.

Does anyone else have this in place? I've been told by my "Friends" at Ernst & Young, who are helping my company consult on this, that it's not normal practice, despite my knowledge of at least 3 major corporations offering it.

Currency protection is generally defined as the following: 1) Exchange rate is locked in at the time the assignment is accepted e.g. 1 pound = $.50. 2) If the US Dollar declines, say to 1 pound = $.40, then all US Dollars exchanged (money to pay for gas, utilities, groceries, anything really) would be reimbursed for $.10 on the dollar (the difference between the locked exchange rate and the actual rate at the time dollars are exchanged).

I'm paid in USDollars obviously.

Thanks


----------



## MichelleAlison (Aug 25, 2007)

Can't help you with your question, but good luck with your move to the UK and welcome to the forum.

Michelle


----------



## Stravinsky (Aug 12, 2007)

With the commercial exchangers you can buy forwards ... i.e. you buy at the rate of exchange now, less a small percentage. You pay a deposit to the company (maybe 10%) then when the day comes that you negotiated, you pay the rest and they sell you the currency at the r/ex that you originally bought at, whatever has happened to the r/ex inbetween.

We did this when we bought our new place in Spain.


----------



## Bevdeforges (Nov 16, 2007)

I haven't heard of this being done, but then again when I was in the UK on an expat package, the dollar was low, but not considered that likely to fall any further.

Actually, thinking back, I think most of my transfer related expenses were paid by the local office (in sterling) and then they billed back the Mother Company for my expenses. I know they were doing this with my rent in the UK and any reimbursable travel expenses. OK, I had to bear the risk of currency fluctuations for my day to day living expenses (groceries, utilities and walking around money) from my dollar denominated salary - but I still made out like a bandit, especially because I was renting out my house back in the US and the company was paying for my housing in the UK.

Depends how long you're planning to be over there, but you might be able to negotiate something similar that will work to your advantage. Or agree to have the currency protection kick in only if the dollar drops by a set amount (like 10% or something). Should the dollar rise (I know, fat chance!) you don't want to have to pay back to the company - and that's the potential down-side of that arrangement.
Cheers,
Bev


----------



## synthia (Apr 18, 2007)

I, too, know people that had that kind of protection. The UK is very expensive by US standards even without a change in the exchange rate. If you had gone there a few years ago without currency protection your income would have been cut drastically. I think it is really important to have, considering the state of the US dollar and its prospects.


----------

