What is a Currency Protection and Participation Contract?

A Currency Protection and Participation contract allows you to choose a rate that protects you from exposure to adverse movements beyond this nominated level; at the same time providing you with the opportunity for unlimited participation in favourable movements beyond it.

Exchange rate at maturity will be the more favourable of either the protection rate or the prevailing spot rate, each adjusted to include the protection margin.

Benefits

  • Provides you with a fixed, known rate to help you safeguard against the currency moving unfavorably.

  • Offers you unlimited gain potential from a favourable rate movement.

  • There's no upfront premium payable.

Considerations

  • The cost (or protection margin) is embedded into the rate of exchange at maturity.

  • You have an obligation to transact at maturity.

  • Cancellation of the contract may incur a cost or benefit to you.

WHAT ELSE DO I NEEED TO KNOW?

Currency protection and a participation contract could be suitable for:

  • Australian importer/exporter, or a business with payments or receipts in a foreign currency.
  • Where you don’t want to pay an upfront cash premium.

More information:

Managing foreign exchange

Movements in foreign exchange rates can impact businesses differently, so it's important to have a strategy tailored to your specific needs.

Learn with NAB

Foreign Exchange with NAB

Read about managing your exposure to changes in the foreign currency market.

Forward Exchange Contracts

Understanding Foreign Exchange risk is important. Learn how Forward Exchange Contracts can be useful.

Markets Preference Centre, opens in a new window

Education, insights and Market Alerts. Also get our FX Newsletter delivered straight to your inbox.

Important information

The information provided in this webpage is intended to be of a general nature only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on any information that you read on this webpage, National Australia Bank Limited (ABN 12 004 044 937, AFSL and Australian Credit License 230686) (NAB) recommends that you consider whether it is appropriate for your objectives, financial situation and needs. NAB recommends that you seek independent advice and obtain and consider the relevant Product Disclosure Statement (available at Financial Markets or by calling 1800 307 827), before acting on any information on this webpage, including whether to acquire or to continue to hold a product or service mentioned.

The products on this webpage are issued by NAB.

Please consider our Financial Services Guide.

The Target Market Determination for this product is available at nab.com.au/TMD.

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