Ways To Buy Foreign Currency Legally In South Africa

How to Buy Forex in South Africa: A Professional’s Playbook

How do I buy forex in South Africa? I recently got this odd question from a friend. What he meant to ask was how you buy (and keep) foreign currency legally in SA. The South African Reserve Bank (SARB) regulates the inflow and outflow of foreign currency. And keeping cold hard cash can be a big legal challenge – just ask the Phala Phala farm fiasco! However, keeping money in digital channels does make it more convenient and makes legal compliance easier.

The SA Reserve Bank’s restrictions on buying foreign currencies

The SARB offers an allowance of how much a South African resident can move out of the country. As of writing this, South African adult residents (above 18 years old) can move up to R 1 million offshore. Children under 18 can only move a maximum of R200,000 per calendar year. This money can be used for things like offshore spending like credit card purchases, offshore online purchases, use of ATMs outside of SA, foreign investments and offshore donations.

Note that unused cold, hard cash must be converted to Rand within 30 days of returning, and it should not be used for purposes other than initially declared.

Where Can I Buy Forex in SA?

What is buying forex? Well, in short, it’s the process of acquiring foreign currency, such as US dollars, to use for international travel, investments, or other financial transactions.

Where can I buy physical forex (cold hard cash)?

Traditionally, the following channels have been used to buy foreign currency (physical cash) – and they tend to add their high fees for convenience and regulatory costs:

  • Banks: Major South African banks, including FNB, Nedbank, Standard Bank, ABSA and Capitec offer in-branch forex services.
  • Bureau de Change: Most shopping malls have shops where you can exchange your Rands for foreign currency

Where can I buy forex online?

  • EasyEquities: If you are looking to invest for the long run, you can buy USD, AUD, GBP and others using EasyForex. This is deposited in the specific currency account where you can use it to buy the available stocks.
  • Paypal: Paypal allows you to buy and receive foreign currency for purchases. this can be added on your website for payment if you’re selling something. If you want to withdraw funds, you need to use FNB’s PayPal service.
  • Shyft: Whether you’re looking for a physical card or a digital one – Shyft has you covered. you can buy a wide array of currencies and either keep it in your wallet or buy ETFs with it in the foreign denomination.
  • Travelex card: Though not fully online, you can buy a Travelex card that is loaded with foreign currency. The money can be used for card purchases of your choice.
  • Forex Bank Accounts: Most banks offer a forex account where you can conveniently buy foreign currency from your cheque account. You can also transact from this account. A special mention is FNB – they’ve made the whole process online, including setup and buying.

How Do I Buy Forex?

As a South African resident, you need to submit information about why you’re buying forex. This includes proof of identity and in some cases proof of address and travel plans. Online apps need to verify your details (FICA, RICA, PICA and all the other ICAs), whereas you are verified in-branch at banks and bureau de change.

Note that there will always be fees payable in South Africa – whether in the spread or a percentage fee of the transaction.

How Do I Buy a Forex Card?

Companies such as Travelex offer a Forex card where you can load and spend other currencies. It works like a prepaid card or a bank account – without the overdraft facilities. These cards are secure. hassle-free and an easy way to carry foreign currency while travelling.

Can You Sell Forex Without Buying?

Yes, you can sell forex without buying it first. If you have leftover foreign currency from a trip or want to exchange it for the South African Rand, most currency exchange providers will facilitate the sale. As per legal requirements, you need to exchange the money within 30 days of arriving back in South Africa. Note that most Bureaux de Change charges a base fee and percentage fee. This means you might be left with no money when exchanging a small amount such as $ 20 or 100 000 000 000 Zim dollars.

Are Forex a Good Investment?

Now, onto a common query: Are forex a good investment? Well, it depends on your definition of investing. Personally, I don’t see forex trading as an investment, as it’s not a long-term game. However, having overseas exposure can be beneficial to your portfolio. For example, investing in foreign stocks and ETFs can give you a Rand/Dollar hedge.

Conclusion

In conclusion, the process of legally acquiring and managing foreign currency in South Africa can be a bit of a maze, but it’s a puzzle worth solving. The South African Reserve Bank (SARB) carefully oversees the flow of foreign currency, with allowances of up to R1 million per year for adult residents and R200,000 for those under 18. These funds can be used for various purposes, from offshore spending to investments and donations.

Traditional channels like banks and Bureaux de Change offer physical forex, but they often come with higher fees. Alternatively, online platforms like EasyEquities, PayPal, Shyft, and Travelex provide convenient ways to purchase and manage foreign currency digitally. Many platforms allow you to invest your foreign currency in foreign stocks and ETFs, which can be a great diversification strategy.

So have fun with forex – stay compliant with SARB regulations.

Happy investing!

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