Advantages of Sending a Currency Transfer to some Pegged Currency Account
In several countries around the world a fixed exchange rate regime is at force, which supports not merely the stability of the local economic climate but simplifies currency transfers as well. In general, a fixed exchange rate (and a pegged exchange rate or perhaps a currency peg) means that the local currency value is pegged to the value of another currency or possibly a currency basket. Usually this is a so-called "hard currency" like the U.S. dollar or even the euro. Important coming from a currency transfer standpoint is that no foreign exchange rate will be applicable from the transfer and the recipient get the same amount of money, minus fees and commissions, but converted in his/her local currency.
Various kinds of currency pegs are known; however, it's irrelevant to the average client of cash transfer services. As pointed out above, most pegged currency regimes involve using a hard currency being a "base" currency to which the neighborhood currency is pegged. Moreover, there are some countries in which a foreign currency is adopted as official national currency. Experts know this as process dollarisation because this kind of process initially involved the U.S. dollar as a currency replacing the local ones.
The most well known cases of dollarisation are Panama, Ecuador and El Salvador in which the U.S. dollar can be an official currency however, you would be surprised the number of countries have pegged their currency for the dollar. Those currencies include the Bahamian dollar, the Caymans dollar, the Lebanese lira, the Uae Dirham, the Chinese Renimbi (yuan), listing exactly the most prominent ones. Several countries, with Europe, have pegged their currency to the euro. Among them are Bosnia and Herzegovina, Bulgaria, Estonia, Lithuania, Latvia and Morocco.
To get a sender or a recipient sending money that is to be converted into a pegged currency implies that both parties will avoid conversion, in the event that the currency transfer is denominated from the same currency because the currency to which the property currency of the recipient is pegged to. In case you are sending a certain amount of euro from Germany into a bank account in Latvia, the recipient will get the same amount transformed into his/her home currency, the Latvian lat, without any losses due to foreign exchange rates. However, you can not avoid bank fees related to the transfer.
On the other hand, you should bear in mind that a pegged currency fluctuates with the currency it is fixed to. By way of example, if you are sending British pounds to Estonia it is just a good idea to wait for just a moment when the pound is extremely strong against the euro. This will allow the recipient in Estonia to learn from the stronger pound and receive more euro, more money in the local currency, respectively. This can be a two-way process so wait for British pound to weaken from the euro if you are waiting to get a currency transfer, which is converted from euro into pounds. However, you will need to temporise until the pound restores its positions from the euro to benefit in the overall transfer.