Australasia

26 Nov 2014
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Is Exchange Rate volatility keeping you awake at night?

Is Exchange Rate volatility keeping you awake at night?

Michael Judge, OzForex Corporate Dealer

Are you or your clients making or receiving international payments over the coming months?

With currency markets extremely volatile heading into year end, now could be the perfect time to take steps to protect against future market fluctuations.

Get exchange rate certainty for future international money transfers up to 12 months in advance.

Forward Exchange Contract
If you think the rate is potentially going to move against you between now and when you will convert your funds, you can take out a Forward Exchange Contract (FEC). An FEC allows you to “buy now – pay later”, lock in an exchange rate today, put down a 0-10% deposit and pay the balance when you want to take delivery of the funds.

Lock in the rate today
The benefit of an FEC is that you can lock-in the rate and fix your budget immediately. If the exchange rate falls by the time you need the funds you are protected.  It should be noted however, that if the rate strengthens in that time you are still locked into the FEC and cannot benefit from the stronger exchange rate. For this reason, some of our clients lock-in a portion of their exposure with an FEC and leave the rest to move with the market.

How it works

1. Select the currency pair, amount and future date the funds will be required.

2. An FEC rate is calculated by adjusting the current market rate for “forward points”, which take into account the difference in interest rates between the two currencies and the time to maturity (this is standard industry practice and not an extra margin charged by us).

3. A deposit of up to 10% may be required when entering into an FEC. You do NOT have to pay the full amount owing until the maturity date.

4. An FEC can be taken out between two days or up to twelve months from today.

Note: Entering into a FEC with OzForex is a binding arrangement. During the life of the Forward Contract you may be required to send an additional deposit for a margin call if the currency you are selling strengthens against the currency you are buying. A Margin Call may occur more than once depending on the exchange rate movements. No interest is paid on deposits.

At OzForex you can transfer money worldwide 24-hours a day at great exchange rates with outstanding customer service, online registration is easy.

If you would like to take out a Forward Exchange Contract for discuss any aspect of our services simply get in touch here

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