What is a Forward Exchange Contract?

The exchange of currencies on a future date, at a rate agreed today.

Benefits

  • Provides a fixed, known rate; and with greater cash flow certainty for business planning purposes.

  • Assists you in pricing your transactions and services.

Considerations

  • The forward rate on your transaction may be worse than the prevailing spot rate at maturity.

  • You can't benefit from a favourable exchange rate movement during the term of your agreed FX transaction.

  • You have an obligation to transact at maturity and the cancellation of the contract may incur a cost or benefit to you..

Customers

Forward Exchange Contracts could be suitable if you're a business with foreign currency payments or receipts, requiring protection against adverse FX movements.

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.

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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 1300 960 355), 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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