Having landed at the Johannesburg airport, I was keen just to get to my hotel room and sleep out the jet lag. It had been a gruesome 13-hour flight in crammed economy class and I was pooped.
Six hours later I decided to venture out to the malls to pick up some groceries and a mobile chip to ensure I stay connected to the rest of the world.
Armed with US dollars and euros I entered the supermarket chain. To my surprise, the check-out cashier said the chain does not accept foreign currency.
I decided to encash the dollars at a bank. "Where is the nearest money-changer?" I asked the cashier. Sorry, came the response from the cashier again. "Today is worker's day and being a holiday, all banks are closed."
Perhaps my hotel could help me out. "Our apologies, ma'am. With the rand (the South African currency) strengthening against the greenback, we do not exchange foreign currency for any of our boarders," replied the lady at the reception.
Indeed, with the strengthening South African economy, the rand has moved up sharply from 12-14 against the US dollar back in 2001 to just about 5.80 today. And it is gaining ground by the day. In the 6 days I was in South Africa, the rand had moved up from 5.98 to 5.80 to the dollar!
In my hurry to get to my hotel room and relax, I had neglected to exchange my foreign currency at the one place that was open for exchange that day -- the airport.
When you are travelling abroad, especially to Third World countries or where there is no capital account convertibility, it is best to carry local currency in addition to euros and the greenback.
Many hotels do not exchange foreign currency especially off late, fearing cases of money laundering. While most others just do not wish to take any chance losing out on the exchange rate with the US currency depreciating.
Also one must remember the exchange rate at hotel desk counters are far from favourable. Considering the way the dollar is headed, it is often safer to more of the carry local currency, which will not be exposed to currency depreciation.
Only fear would be of one carrying too much of the local currency and then not being able to use it in future overseas trips. This explains the preference for the euro, the sterling pound and of course the US dollar.
So how much foreign exchange should one carry, and in which denomination. Outbound travellers usually work on guess-estimates, which often results in having taken too much or too less, and then having to purchase more overseas at higher exchange rates.
Should he have opted to take too much and the exchange rate having gone the other way, the traveller would end up a loser returning home with unspent dollars and euros he may not need for quite some time.
"Invariably travellers tend to lose five to six per cent when they surrender their unused foreign currency to banks or moneychangers," said Travelex Worldwide Money group director commercial foreign exchange & managing director India, Yogesh Shetty.
Of course, the other alternative is making payments using a credit card. But here there is no transparency, as one does one know at what exchange rate one is being billed until one returns home and sees his card statement. By which time, it is too late of course.
Entities like Travelex, the world's largest foreign exchange company, offers almost all different foreign currencies. More importantly Travelex offers to buyback the foreign currency at the same price at which the traveller bought it from the foreign exchange retail outlets.
Today Travelex is the only agency offering this buy-back product within 31 days of purchasing the currency. Banks and other foreign exchange dealers do not promise to buy back any currency at any pre-determined rate.
Buying back currency and traveller's cheques at the same rate at which they were purchased is free of commission, and comes at a small fee of Rs 100. A small premium to pay which takes away all exchange risks.
Money matters
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