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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