Exchange in the Future (Forwards)
Forward Contracts – protect your future
A forward transaction enables you to buy or sell a currency at a fixed rate on a specified future date. You may lock in today's forward exchange rates and eliminate the risk of future volatility with forward contracts.
Short and long-dated forwards are available in a variety of currencies. A 10% deposit is typically required for forward market contracts or 'forwards' (the deposit must be received within 2 business days). Forwards are priced based on the amount of time you wish to go forward, i.e. 30 days, 6 months, 12 months and the interest rate differential between the two countries' currencies.
Closed Forward Contracts:
- Exact settlement date in the future
- Used to meet date-sensitive future payment obligations
- Flexibility to extend settlement date *
Open "Window" Forward Contracts:
- Settle a contract within a pre-agreed range of days (a "window" of time)
- Used when there is uncertainty regarding the actual payment date
- Flexibility to give or take small portions of currency from the original amount contracted ("drawing down" from the forward contract)
Closed Forward or Open Forward?
Each client's individual situation dictates the choice. If you need to make a date-sensitive one-time future payment, then a closed forward contract would suffice. But if you would like to have the flexibility to make several payments at different future dates, an open forward contract should satisfy your requirements. Speak with your Venstar Exchange Account Specialist to evaluate your particular business or personal needs and decide on your risk mitigation strategy.
* Note: Forward contract obligations must be fulfilled and there may be costs associated with early termination or extension. Extensions can only occur under certain conditions and are subject to approval.
Contact a Venstar Account Specialist today to discuss the best Forward Transaction alternatives for you. Our experienced team is standing by, call us today at 1-877-372-1971 or 1-310-882-5558. Or fill in our online form and let us contact you.
