South Africa is one of the countries with strong financial regulations globally. This makes it not so easy to find foreign exchange agencies that are unregulated and working on easily accessible streets. You will have to travel a few kilometres to find a foreign exchange agency. In some places, there will not be one closer to various locations. Only regulated providers are available in a few populous areas and international airports. This is understandable as they also seek to serve many customers and increase their profits, which are marginal in the foreign exchange market.
Exchange Foreign Currency In South Africa
Given the above, one of the most asked questions by international travellers who come to South Africa is how and where they can exchange foreign currency. Many foreign exchange houses in South Africa are always ready to assist international visitors and South Africans seeking to buy or sell foreign currency. Below, we will look into how you can utilise them to sell or buy foreign currency.
Prominent foreign exchange companies in South Africa
Some prominent names in the South African foreign exchange market are Bidvest Bank, Western Union, American Express, Travelex, MoneyGram, and Mukuru. Businesses like Mukuru and MoneyGram are also involved in foreign currency remitting to and from foreign countries. But customers can exchange international currencies therein.
However, many international travellers trust using banks for their foreign currency transactions. Therefore, this article will focus more on banks to provide umbrella guidance (because other foreign exchange companies, such as those mentioned above, use banks as benchmarks for their requirements).
Not all banks in South Africa offer foreign exchange services. Local and internationally owned banks facilitating foreign exchange are Bidvest Bank, Mercantile Bank, Nedbank Group, Capitec Bank, Albaraka bank forex, Absa Forex trading bank, Habib bank south Africa, Chase bank South Africa, Standard Bank, Bank of America, Citigroup, and FirstRand Bank.
Some of these institutions are mainly located in Sandton and Cape Town, poised primarily to assist international investors’ international transactions. But individual customers with smaller, transactional amounts can be assisted at banks such as Capitec, Nedbank, and Bidvest.
Steps to exchange foreign currency in South Africa
Get all the requirements.
The first step is to ensure that you have all the requirements to exchange currency in South Africa successfully. These requirements are needed when you are buying or selling currency. Below is the list of three essential requirements.
- Provide your original I.D or passport
- If need be, provide proof of travel in the form of a ticket (plane or bus)
- Provide a proof of residence that’s not older than three months
Ordering foreign currency
In case you want to travel abroad, you must order foreign currency. In this case, you will be exchanging local South African Rands for either U.S Dollars or Euros, etc., to spend once you reach your destination country. When travelling, it’s wiser to exchange foreign currency through major banks because they have access to various currencies – unlike small bureau de changes that may only have major currencies such as U.S Dollars and Euros.
The process to order foreign currency depends on the bank you approach. For example, if it is Standard Bank, they allow you to order forex online and even direct them to send it to your local branch (if you have a current account with them).
However, you must indicate that you will be travelling within the next 60 days and provide all the requirements listed above. If you do not bank with the bank you approach, you can access major foreign currencies immediately upon fulfilling the above conditions. Just approach any of the above banks; someone in the banking hall will assist you and let you know where you must go to order the foreign currency.
International stock market traders based in South Africa order foreign currency in large amounts. These do place orders via the phone through their relationship manager in the bank. Banks with such relationship managers are Citigroup and Mercantile Bank, to name examples. After placing the order, the client receives foreign currency before transferring the Rand amount plus to the bank.
Usually, such funds are immediately directed to the intended markets. For example, if an investment manager wants to buy Nigerian shares for their client, they will call a bank such as Mercantile Bank and place the order for Nigerian Nairas. The bank will already have details of stockbrokers in Nigeria, where they immediately send the money instead of their client in South Africa.
Selling foreign currency.
International visitors must exchange their foreign currency for local currency. The process to do this is the same as ordering forex. You will be required to provide standard requirements such as the ID and travel ticket. Once you approach the above-listed banks, you will be able to access local currency immediately in cash. But if you have an account with the bank you approach, your local currency could be deposited in your current account.
Additional information about foreign exchange in South Africa
The fees for buying and selling forex depend on your banking institution. Standard bank charges an R74.55 admin fee plus a 2.3% fee on all currencies. More so, banks benefit from the spread (the difference between the actual exchange rate and the bank’s official exchange rate). For example, if the rate for each U.S Dollar is R14.3 on the market, the bank could quote a dollar for R14.28.
This means that when you sell your U.S Dollars, the bank will give you R14.28 for each dollar, thereby making a profit of R0.02 for each dollar. The opposite applies when you are selling Rands for Dollars. The bank could quote you R14.32 for each dollar they give and still make a profit of R0.02 per dollar.
If you bank with some banks such as Citigroup and Bank of America, they will exchange your money for free.
Essential rules for international travellers
If you are an international visitor, you can only keep foreign currency for 30 days. Business travellers can keep the money for 90 days if they must make another trip within the 90 days. More so, you can only bring a maximum of R25,000 in cash and US$10,000 or equivalent in other currencies.