A user has asked: I am looking for a service that can handle the conversion of 500,000,000 YEN to USD.
The answer to this question is that you really need a currency broker for a large foreign exchange conversion. Using a currency broker for large transactions will give you better exchange rates, more control over the timing of the transaction, and also offer some decent hedging tools.
Banks are notoriously expensive for large YEN USD transactions and in some cases can charge around 4% of the value of the conversion in commission (by widening the exchange rate). If you use a currency broker for a 500m JPY to USD (essentially a $5m) transaction you should be able to get exchange rates between 0.1% and 0.5% from the mid-market depending on who you use.
Money transfer providers and digital-only platforms would most likely not be able to effectively handle a transaction of this size and are much more appropriate for smaller or regular international payments.
Things to be aware of for large JPY USD Conversions
There are a few things to keep in mind when using a currency broker for a large JPY to USD currency conversion though our 10 step guide to large currency transfers explains these in more detail.
It can take a day to a week or so to set an account up, so make sure you respond to all requests for documentation quickly. As you may find that the exchange rates move against you more whilst you are setting up your account compared to accepting your bank’s high charges.
You’ll need to prove the source of funds if you are setting up a new account at a currency broker and may be asked to provide documents to support where JPY came from and also what the USD transfer is for. These are fairly standard anti-money laundering requests, but sometimes potential clients can find it intrusive. However, currency brokers are required to conduct them by the regulators.
Locking in a JPYUSD exchange rate for a future date
Currency exchange rate fluctuations can be mitigated by using currency forward, but again you will have to get your account in order before you can use these. Here are the pros and cons to locking in an exchange rate, it’s important to note that whilst forwards are good for protecting the downside, they also restrict you from getting a better rate if the currency price moves in your favour.
Richard founded the Good Money Guide (previously Good Broker Guide) in 2015 and has been a broker for 20 years most recently at Investors Intelligence and previously a multi-asset derivatives broker at MF Global (Man Financial). Richard started his career working as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson) after interning on the NYMEX oil trading floor in New York and London IPE in 2001 & 2000.