Foreign Currency

First-time foreign traveller? Here are seven things you need to keep in mind

Indian travellers now enjoy liberalized visa access, including ‘visa on arrival’, to 62 countries. According to the Henley Passport Index 2024, the Indian passport stands at 85th position in a list of 109 countries, and it makes travelling around the world more convenient and hassle-free than ever before. As a result, a remarkable growth in the foreign visits of Indian citizens is visible nowadays.

If the visa is assured, then a traveller has to arrange two important things before flying to a foreign destination. First, a travel insurance policy and then foreign currency. The latter is more important considering the complexities of foreign exchange rules. Further, for a first-time traveller, there are higher chances of getting cheated while converting the Indian rupee into a foreign currency in an unauthorized outlet.

Here are some tips for a first-time foreign traveller:

First, the traveller should know how much foreign currency one can carry while going to a country. In accordance with the stipulations outlined in the Foreign Exchange Management Act (FEMA), individuals are restricted to carrying a maximum of $3000 or its equivalent in foreign currency when traveling abroad. In addition to that certain exceptions exist wherein travellers destined for countries such as Iraq or Libya, or any Commonwealth of Independent States, are permitted to carry amounts exceeding $3000. However, any sum surpassing this limit must be facilitated through means such as a Forex prepaid card or Travellers Cheque (TC)

Second, don’t keep all eggs in the same basket. Keep a part of your foreign currency in a prepaid forex card as it will also allow you to carry out smooth transactions, just like a debit card or credit card, in a foreign land. It prevents you from becoming totally bankrupt in a foreign country in the case of a theft or any misadventure during the journey. It is advisable to allocate 60% of one’s foreign exchange holdings to a prepaid card, with the remaining 40% retained in cash. This distribution strategy serves to provide a balanced approach to managing financial resources while traveling abroad.

Third, activate your international debit/credit card. Along with the forex card, keep your international debit/credit card activated before the journey begins. It can be used in an emergency situation abroad. Moreover, many international debit/credit cards offer additional features like access to airport lounges and other premium services. You can’t afford to miss these perks when you are in an alien world where each penny is counted.

Fourth, always do business with Authorized Dealers. Otherwise, you will probably be enmeshed in serious legal complications. Even if you get better deals from the unauthorized or unlicensed dealers, don’t fall for them as there is a greater chance of getting counterfeit foreign currency in exchange of your money. Furthermore, you should be aware that immigration officers may request documentary evidence regarding the carriage of currency. In such instances, providing a receipt from an authorized dealer can serve as corroborating evidence.

Fifth, choose the best rates. Compare the exchange rates available in the market before taking a final call. Remember, foreign currency rates are subjects to market risks and global events. It may vary anytime. At the time of geopolitical conflicts or market crash, investors tend to buy safer currencies. So, there will be huge demand for global currencies such as the US dollar and euro during the turbulent times. Naturally, you won’t get a better rate at that time. 

Sixth, keep your KYC documents ready. You should have valid passport and PAN to buy foreign currency from an authorized dealer. Passport and PAN followed by visa, onward/ return air tickets are the valid documents a traveller should carry.  

Seventh, avoid doing business at premium shops. Better not to buy foreign currency from shops at airports, international hotels and malls as they charge premium rates for such transactions. At that point, you may be in dire need of money and your will have no option at all. So, always keep a little money for emergency use.

Notably, India’s Unified Payment Interface (UPI)-based payment system can now be used at merchant outlets in some countries like Sri Lanka and Mauritius, and discussions are on to launch it in some Gulf countries. It is a major breakthrough that will help the Indian travellers explore the world without being worried about how to make payments in a distant land.

The writer is  Director & CEO, Unimoni India.Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of Business Today.

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