Home › UK Rules › Business › Stock Trading › Everyday Currency Changes
Everyday Currency Changes & What They Mean for Freelancers Working Globally

Globalization and high technology have created a new reality: the digital economy. Where more and more professions are shifting to remote work — 1.57 billion people are freelancers. Many of them work with clients in the U.S. through platforms such as Upwork, Fiverr and others, according to Exploding Topics. But not all freelancers know that currency changes can affect tax contracts by 10% or more in a week. How can remote workers stay profitable despite currency fluctuations?

In partnership with the experts at Rates.fm — financial currency of the World data portal — below we present a toolkit for digital nomads working globally to track exchange rates, which could be their clue to a more stable income.

How Do Currency Fluctuations Affect Freelancers?

Even small currency fluctuations can significantly change the income of freelancers working with international clients. Many factors make up these fluctuations, including inflation, national central bank interest rates, economic growth, and political instability. For example, if a country’s central bank raises interest valuations, it will lead to a stronger national currency, which attracts investors. In the case of remote workers, who are mostly located in developing countries, the strengthening of the dollar means a loss in local currency for them.

Here’s how it works. Suppose you are a freelancer from Ukraine who gets paid in US dollars. Input: The exchange rate of dollars to hryvnia drops by 10%. Result: Your income in dollars will decrease by 10%. This can lead to significant losses, especially if the freelancer works with large sums.

Example:

  • Before exchange rate change: 1000 USD = 41,000 (rate of 1 USD = 41 UAH)
  • After exchange rate change: 1000 USD = 36,900 UAH (rate of 1 USD = 41, 41 UAH)

Thus, if the exchange rate of hryvnia to the dollar falls by 10%, the income of a Ukrainian freelancer in hryvnia will decrease by 4,100 UAH. Here is the list of professions that are directly affected by daily currency rates — these are:

  1. Content writers.
  2. Graphic designers.
  3. Web and mobile application developers.
  4. Digital marketing consultants.
  5. Video editors and translators.
  6. Digital nomads.

Fluctuations in currency affect marketing and IT companies even with smaller quotes. If your start-up marketing company works with amounts over 10,000, at an exchange rate of 1 EUR = 1.10 USD, you make 11,000 USD. If the exchange rate drops to 1 EUR = 1.05 USD, income drops to 10,500 USD. 500 USD a month for 12 months is -6000 USD a year. Conclusion: Freelancers lose income due to unfavorable exchange rates. Monitoring rates helps companies with foreign partners to forecast income and adjust rates or fees in time. Use currency tracking services like Rates.fm to react quickly to changes.

  • You might ask: “Are such small changes important? — Yes, they are, given the frequency of payments and the scope of the work.

Currency Risk Management Tools & Strategies

Effective tools for currency risk management include platforms such as RATES — information portals on the world’s financial currencies. They provide up-to-date quotes and allow you to track changes in real time. They also provide forecasts based on technical and fundamental analysis. Such platforms usually have applications or the possibility of API integration. The latter allows you to integrate the information source script into the provider’s website or application, which also helps you to quickly convert currencies and track rates.

For freelancers who work with multiple partners and currencies, API integration with Google Sheet or Microsoft Excel may be ideal. Here’s why:

  • Process automation — it is the ability to automatically upload and update exchange rate data from third-party resources into the spreadsheet. From an accounting perspective, it simplifies processes and reduces the likelihood of calculation errors. 
  • Ease of use — pre-built API solutions and scripts that can be easily integrated into familiar interfaces, be it a website, mobile application or document table. 
  • Flexibility and scalability — it’s about the ability to customize and adapt systems to meet specific needs. For example, with the Google Sheets API, you can customize notifications about changes in quotes or predict fluctuations based on historical data. 

Thus, API integration with Google Sheets or Microsoft Excel can really simplify currency risk management and accounting for freelancers, providing real-time information for informed business decisions. If you’re looking to learn more about API integration into documents, Apix-drive is the perfect place to start.

4 currency risk management strategies

We have selected 4 such strategies that can be implemented directly in the tables to obtain the necessary information to minimize the risks associated with the unpredictability of the Forex market.

  1. Automatic course updates. E.g:
    1. Formula =GOOGLEFINANCE(“CURRENCY:USDEUR”) returns the current dollar to euro exchange rate.
    2. API integration from third party sources. 
  2. Setting up notifications. Tools:
    1. Google Apps Scripts.
    2. Power Automate for Microsoft Excel.
  3. Hedging.
    1. Futures and options — their models can be created using built-in functions in Excel or Google Sheets.
  4. Multi-currency accounts & conversion. 
    1. Using the API in tables, you can automate the process of managing funds based on multi-currency accounts. 

This approach is the best way to assess your current financial capabilities and plan your budget for paying overseas freelancers. If you want to expand your trading knowledge, read Irina Tsymbaliuk’s guide to the Best Online Trading Platforms.

How to Adjust Rates and Fees Based on Currency Exchange Rates?

Freelancers often set the wrong rates for their services because of currency fluctuations. This means they lose money each time they convert currencies, as the rate can change between the time of the contract and the time of payment. Weaker currencies lose value against the dollar or euro. Banks and payment systems take 5-10% of the profit. That’s $5,000-$6,000 — the cost of a week’s holiday for four people.

There are several ways of dealing with this problem:

  1. When drawing up the contract, it should be agreed that the fee will be recalculated using the exchange rate at the time of calculation. 
  2. A flexible tariff for different currencies.
  3. For long-term contracts, a risk factor for currency fluctuations should be included. 

Here is the formula with the calculation at the basic rate of 41 UAH per dollar and the current rate of 42 UAH per dollar:

Example:

  • Prime rate of freelance service: 1000 UAH
  • Basic exchange rate: 1 USD = 41 UAH
  • Current exchange rate: 1 USD = 42 UAH

Calculation:

New tariff = 1000 UAH x (42 : 41) = 1024 UAH

So if the dollar exchange rate changes from 41 UAH to 42 UAH, the new rate will be 1024 UAH.

Banking websites, financial portals such as Rates or payment system applications are platforms where freelancers can find out the current valuations and make quote forecasts. However, in order not to be distracted by accounting at every calculation, API integration of primary sources directly into the accounting spreadsheet — such a solution can be considered ideal.

Issue

How do you protect your income from currency fluctuations? In a globalized and digital economy, it’s important to not only track exchange rates, but also adjust your rates to maintain a steady income. Are you using tools like automated rate updates and API integration to minimize risk and ensure financial security in the freelance world?

Everyday Currency Changes & What They Mean for Freelancers Working Globally