Whether you're new to Financial Markets or a veteran, our frequently asked questions should give you the info you need.
Can I buy physical dollars from the dealing room?
No. Australian Markets Sales don’t provide this service.
If you’d like to purchase foreign currency notes or travellers cheques, please call into your nearest NAB branch.
How can I get an idea of what the foreign exchange rate is right now?
Give us a call on 1800 019 215, Mon - Fri 9am-5pm (AEST/AEDT).
How can I reduce the impact of exchange rate movements on my business?
To reduce the impact of unfavourable exchange rate movements on your business, you can put a Risk Management Strategy in place.
Risk Management is about identifying and managing market risk. It involves understanding the risk profile of your business and implementing a strategy to manage the level of risk with which your business is comfortable. This will ultimately provide a level of certainty for your businesses' cash flow.
- Risk management for businesses
How important is an FX risk strategy?
It’s very important. Throughout 2009, the Australian Dollar experienced variations of close to 45%. These drastic movements have implications for anyone with receipts and payments denominated in foreign currencies.
Ignoring currency risks and doing nothing may result in currency losses, which can impact your business in many ways—from a direct impact on your profit and loss to an inability to take advantage of a particular opportunity (due to foreign exchange losses). The volatility has meant that the domestic currency equivalent of a foreign exchange payment may have changed, which has a direct cash flow impact.
Although exchange rate movements up and down benefit importers and exporters conversely, it’s important to formulate a strategy where you can reduce your foreign exchange exposure—to meet your business and transactional requirements in a way that suits your risk profile.
- Risk management for businesses
How important is the review process of a foreign exchange strategy?
It’s very important. We look at structures every six months and review the whole strategy on an annual basis.
If we see significant changes in the market or in economic conditions, we’ve the ability to review your structures and identify those at risk or under stress, and accordingly may need a change in strategy.
Every year you should look at how your business is positioned against your five-year plan, how your industry may have changed, what regulatory changes may be in effect, and how all these variables may impact your business.
How is a Forward Exchange Contract (FEC) priced?
The cost of entering into a Forward Exchange Contract is the exchange rate quoted to you. This exchange rate incorporates the inter-bank forward rate (including the forward margin) plus the NAB margin. The inter-bank forward rate fluctuates according to the interaction of market supply and demand factors.
NAB covers its costs and the risk it faces, and derives its profit by adding the NAB margin to the inter-bank forward rate. So, you’ll pay for the transaction by accepting the exchange rate that we quote.
How is the exchange rate determined?
The exchange rate we quote you incorporates an inter-bank market derived rate and margin to compensate us for our costs and profit.
To what extent is foreign exchange risk management about trying to predict movements in the AUD?
Everyone has a view and some idea of the long range average of the Australian Dollar, but foreign exchange risk management shouldn’t be a speculative venture.
Many companies – large and small – have been severely affected by short-term currency decisions; the speed of change in the foreign exchange market often takes people by surprise.
You’ll need a considered approach to your currency exposure that helps you be protected from the direct impact of adverse currency movements, but able to participate in favourable movements.
- Risk management for businesses
What are the currency cut-off times?
The below list features cut-off times of same-day value currencies for same-day payments processing, when submitted on a working day and in the country of the currency.
Currency | Code | NAB Connect Cut Off Times (AEST/AEDT) |
Samoa tala | WST | 10:00:00 AM |
Fiji dollar | FJD | 11:00:00 AM |
Indonesian rupiah | IDR | 11:00:00 AM |
Philippine peso | PHP | 11:00:00 AM |
Solomon Islands dollar | SBD | 11:00:00 AM |
Thailand baht | THB | 11:00:00 AM |
Vanuatu Vatu | VUV | 11:00:00 AM |
Japanese yen | JPY | 12:00:00 PM |
Papua New Guinea kina | PGK | 12:00:00 PM |
Singapore dollar | SGD | 12:00:00 PM |
New Zealand dollar | NZD | 1:00:00 PM |
Bahrain dinar | BHD | 3:00:00 PM |
Bangladesh taka | BDT | 3:00:00 PM |
Omani Rial | OMR | 3:00:00 PM |
Pakistan rupee | PKR | 3:00:00 PM |
Sri Lankan rupee | LKR | 3:00:00 PM |
Czech koruna | CZK | 3:00:00 PM |
UAE dirham | AED | 3:00:00 PM |
Indian rupee | INR | 3:00:00 PM |
Kuwaiti dinar | KWD | 3:00:00 PM |
Israel shekel | ILS | 3:00:00 PM |
Jordanian dinar | JOD | 3:00:00 PM |
Saudi Arabian riya | SAR | 3:00:00 PM |
Hungarian forint | HUF | 5:00:00 PM |
Kenyan shilling | KES | 5:00:00 PM |
Mexican peso | MXN | 5:00:00 PM |
Polish zloty | PLN | 5:00:00 PM |
Hong Kong dollar | HKD | 5:00:00 PM |
Norwegian krone | NOK | 5:00:00 PM |
South African rand | ZAR | 5:00:00 PM |
Swedish krona | SEK | 5:00:00 PM |
Danish krone | DKK | 5:00:00 PM |
Euro | EUR | 5:00:00 PM |
Swiss franc | CHF | 5:00:00 PM |
British pound | GBP | 5:00:00 PM |
Canadian dollar | CAD | 5:00:00 PM |
United States dollar | USD | 5:00:00 PM |
Processing of some currencies necessitates at least 24-hours prior notice of payment.
Why can't I make a Value Today payment for some currencies?
Cut-off time for Value Tomorrow currencies, for payments where processing can be completed tomorrow, on the basis tomorrow is a working day in the country of the currency:
AEST/AEDT |
Currency |
09:45am |
Central Pacific Franc – XPF |
10:45am |
Indonesian Rupiah – IDR |
11:45am |
Philippine Peso - PHP |
What currencies will NAB agree to exchange?
We exchange the following currencies:
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What different types of FX transactions are available?
Spot and Forward Foreign Exchange transactions are classified by the period between the transaction date and the settlement date:
- Value Today
- Settlement date is the same day as the transaction date
- Value Tomorrow
- Settlement date is 1 business day after the transaction date
- Spot
- Settlement date is 2 business days after the transaction date
- Forward Exchange Contract (FEC)
- Settlement date is more than 2 business days after the transaction date
- Limited Participation Foreign Exchange transactions
- Participating Forward
- Full Participation Foreign Exchange transactions
- Vanilla Call Option.
- Vanilla Put Option.
- Currenty Protection and Participation Contract (CPP).
What is a 'foreign exchange transaction'?
A foreign exchange transaction is a contract to exchange one currency for another currency at an agreed exchange rate on an agreed date.
What is the difference between the forward rate and the spot rate?
The forward rate differs from the spot rate by the inclusion of the Forward Margin, which is calculated from the difference between the interest rates that can be earned in the respective countries of the currencies being exchanged.
The Forward Margin compensates the buyer of the currency with the higher interest rates for extra interest that could have been earned if exchange had occurred earlier, and the proceeds had been invested at the higher rate of interest.
The greater the difference in the interest rates between the two currencies, the larger the Forward Margin is likely to be (all other things being equal). Conversely, the smaller the differential, the smaller the Forward Margin is likely to be (all other things being equal).
What is the settlement process?
Foreign exchange transactions will usually be physically settled, that is, by delivery of the relevant currency by each party to their nominated bank account.
What kind of approach should you take to manage your foreign exchange exposure?
Currency markets are volatile. But for a business, it’s not about what the future holds that counts; it’s what they hold for the future.
We advocate a portfolio approach to foreign exchange risk management that encompasses the whole business, aligning your business profile and risk profile with a suitable foreign exchange profile. We can structure foreign exchange options to provide flexibility in cash flows, which allows for a known protection rate and varying degrees of participation in favourable market movements.
We begin with a whole-of-business survey that assesses the ebbs and flows in payments and how that translates back to business operations and impacts the profit and loss. We stress test the impact of the level of the currency on various payments, and how those varying currency levels may impact all parts of your business over the course of the year. Once we’ve completed an assessment and determined how currency rates affect the different moving parts, we’ll advise on a solution.
A foreign exchange strategy may include various combinations of protected and unprotected portions of a portfolio and various combinations of products. Our foreign exchange solutions provide a range of products tailored to your specific business requirements. These products include Call and Put Options and Forward Foreign Exchange Contracts.
What time does the Foreign Exchange market open?
The foreign exchange market is open from 5am Monday until 9am Saturday (AEST/AEDT).
Who can benefit from a Foreign Exchange strategy?
A foreign exchange strategy will benefit small to medium enterprises, importers or exporters with invoice payments or receipts quotes in foreign currencies.
Those who should consider how foreign exchange movements impact their business include:
- borrowers with loans denominated in foreign currencies
- investors in overseas assets denominated in foreign currencies
- clients repatriating overseas profits
- clients paying or receiving other foreign currency amounts.
Why do currency movements happen?
The inter-bank market rate fluctuates due to supply and demand factors including:
- investment inflows/outflows
- economic and political circumstances
- market sentiment or expectations
- the volume and value of goods and services imported and exported.
If the interaction of these factors increases demand for a currency, then the price of that currency should increase (all other things being equal).
If the interaction of these factors decreases demand for a currency, then the price of that currency should fall (all other things being equal).
Why is the rate that I get different from the rate I see on various websites?
We cover our costs and the risk we face, and derive our profit by adding our margin to the inter-bank rate (generally speaking, the rate on various websites).
How can I enter into a “Spot” or “Forward” transaction?
We can make Spots and Forwards available to you. Please contact us on 1800 019 215, Mon - Fri 9am-5pm (AEST/AEDT) for more information.
What is the term of a transaction?
The term of a transaction is the period between the transaction date and the expiry date. Different terms of transactions are available for different sets of currency.
Contact your banker or market specialist for more information.
What settlement dates are available?
On the transaction date, we’ll also agree on a settlement date. The settlement date will be stated in your confirmation letter.
Settlement dates usually range from two to 360 business days after the transaction date, and sometimes longer.
What other costs might be involved with a transaction?
If you don’t deliver a currency on the agreed settlement date then you may be liable for an interest charge to compensate us for non-delivery. From time-to-time, interest on overdue amounts will be calculated at a rate and in a manner determined by us; it may be capitalised monthly at our discretion.
You may request that a transaction be cancelled or varied. We may agree to your request at our discretion. If we do agree to cancel or vary the transaction, you may be liable to pay us for additional costs including any fees and charges. And if you’re varying the transaction, you may need to pay a less favourable exchange rate.
What are the documentation pre-conditions for a transaction?
You’ll need to enter into our standard documentation for foreign exchange transactions. This may include signing our standard master agreement if you’ve not already done so.
If you’re a business customer, you’ll need to provide details as to which of your staff are authorised to deal on your behalf.
What is the NAB margin?
The NAB margin covers our internal transaction costs, compensation for risk, and profit margin.
What is the transaction date?
Transaction date means the date on which you enter into an agreement for a product with us.
What is the settlement date?
Settlement date means the date in the future on which the currencies will be exchanged and delivered. The Settlement Date will usually be two Business Days after the Expiration Date unless we agree otherwise with you.
What is a 'Value Today' transaction?
A Value Today transaction is an agreement to exchange:
- a specified amount of one currency for another
- at an exchange rate to be determined on the day
- with it to occur on the day (i.e. settled on the same day as the transaction date), on the basis that it is a business day in the country of the currency.
It allows you to fix the value of a foreign currency cash flow on the day at the then-current exchange rate.
What is a 'Value Tomorrow' transaction?
A Value Tomorrow transaction is an agreement to exchange:
- a specified amount of one currency for another currency
- at an exchange rate that’s determined on the day
- with the exchange to occur the next day (i.e. settled one business day after the transaction date), on the basis that the next day is a business day in the country of the currency.
It allows you to fix the value of a foreign currency cash flow on the day at the then-current exchange rate.
What is a Spot (FX) transaction?
A spot transaction or spot is an agreement to exchange:
- a specified amount of one currency for another
- at an exchange rate that’s determined on the day
- with it to occur in two business days' time, on the basis that it is a business day in the country of the currency.
It allows you to fix the value of a foreign currency cash flow on the day at the then-current exchange rate (i.e. the spot rate).
What is a Forward Exchange Contract (FEC)?
A Forward Exchange Contract or FEC is an agreement to exchange:
- a specified amount of one currency for another currency
- at an exchange rate that’s determined now
- with the exchange to occur at least three business days in the future, on the basis that it is a working day in the country of the currency.
It allows you to fix the value of future currency cash flows at the current day’s forward rate.
Forwards protect you against the risk of a future spot rate becoming less favourable to you than the forward rate that you’ve agreed on. A forward will protect you from unfavourable movements in the exchange rate to the extent that the spot rate at expiry is worse for you than the agreed exchange rate (i.e.: a forward rate).
However, under a forward you won’t benefit from favourable movements in the exchange rate because it’s fixed on the transaction date.
How are foreign exchange transactions over the phone negotiated?
The terms of each transaction are usually agreed verbally over the telephone. Once we’ve reached an agreement, both you and we are bound by the agreed terms.
Conversations with our dealing room and settlement departments are recorded. We do this to ensure we’ve a complete record of the details of all transactions. Recorded conversations are reviewed when there’s a dispute, and for staff monitoring purposes. This is standard market practice.
Shortly after entering into a transaction, we’ll send you a confirmation outlining its commercial terms.
It’s extremely important you check the confirmation carefully to ensure that it accurately records the terms agreed between us. In the case of any discrepancy, you’ll need to raise the matter with your banker or markets specialist immediately. You’re bound by the confirmation unless you tell us there’s an error within one business day.
What information is required to execute a transaction?
The information that you will need to provide will include the:
- foreign exchange product you’re buying
- currencies to be exchanged
- transaction amount
- expiration date or settlement date.
How do I complete a transaction?
Foreign exchange transactions are often completed online. For certain transactions, we’ll contact you and advise you what foreign exchange rate will be used to exchange currencies on the expiration date.
On the settlement date, you’ll need to deliver the relevant currency to us. You must deliver the currency in cleared funds. If you and we owe the other amounts in the same currency on the same day, then the party owing the higher amount must pay the other the difference between those amounts (unless we agree otherwise). In these circumstances, the other party wouldn’t make a payment.
Please contact your banker or markets specialist if you can’t deliver us the relevant currency on the settlement date, and the transaction won’t be cash-settled because it does not involve AUD.
Do you have a foreign currency converter?
Yes. Check out Foreign exchange rates.