Forward contract

Forward contract

Lock in an exchange rate for your future payments

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What is a currency forward contract?

A forward contract allows you to fix a prevailing exchange rate for a future overseas payment. It may require a deposit, however this enables you to secure an exchange rate for up to two years. Protecting your rate from any upturns or downturns in the market, a forward contract is also often referred to as a currency forward or deliverable forward.

 

What are the benefits of a forward contract?

Agreeing a forward contract helps fix the cost of your international payment, allowing you to plan ahead with reassurance and certainty.

This works both ways, however, as the contract provides you with the same agreed exchange rate even if the rate moves in your favour by the time it comes to settlement. Forward contracts are often used as part of a hedging strategy to reduce the currency exposure of your business.

 

Why would I need a forward contract?

An example, the GBP/EUR exchange rate was 1.31 on the 23rd June 2016, the day of the EU referendum. However, after the result market uncertainty saw the rate initially fall to 1.23 the day after and fail to return to its pre-referendum high over the next two years.

Had your business agreed a forward contract prior to this, you would have received an above market rate for up to two years of international payments. Our Currency Zone allows you to view the current exchange rate and monitor market movements. 

 

How can I agree a currency forward with moneycorp?

You can agree a currency forward and lock in an exchange rate by speaking with your account manager over the phone. They can talk you through the process and agree an amount and duration for your contract, as well as answer any questions or queries you may have.

As a business, there may be large invoices to pay or orders to make on a regular basis. With a currency forward, you can shield these payments from any exchange rate movements and mitigate the risk that the currency markets can pose. This is ideal if you’re looking to protect profits or maintain a tight budget.

In addition to a foreign exchange forward contract, we also provide a wide range of FX solutions for your business needs.

What else we can offer

120+ currencies available

120+ currencies available

24/7 access

24/7 access

The ability to set up regular payments and target rates

The ability to set up regular payments and target rates

What are the alternatives to a forward contract?

Spot contracts

Spot contracts

Make an international payment with the current exchange rate by agreeing a spot contract. 

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Market orders

Market orders

Our range of market orders includes stop loss, limit and OCO (One-Cancels-the-Other) orders.

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FX solutions

FX solutions

Browse our full range of currency tools designed to help your business with its FX needs.

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Our foreign exchange solutions for your business

Our foreign exchange solutions for your business

To find out more about our foreign exchange and global payment solutions for businesses, you can view our brochure.

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Discover our other Business Solutions

Risk Management

Risk Management

You could protect your business from foreign exchange market volatility and minimise risk with our range of hedging tools which can also help forecast cash flows.

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Payment Solutions

Payment Solutions

We provide payment solutions for businesses with local or international requirements, who are looking to simplify the process and cut on-going costs.

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