What is a forward contract

| Friday, September 25th, 2015


A forward contract is a deal that enables a client to buy foreign currency based on current market rates, for a delivery at a predetermined date in the future (up to one year ahead). This allows a business or individual to fix a rate now to take away exchange rate uncertainty for the future.
A deposit will be required for each forward deal which acts as security and is deducted from part or full settlement of the trade.
Corporate clients regularly use forward contracts as an important part of hedging their foreign currency needs, protecting their profit margins and identifying cost levels. They are also a very useful product for property transactions which have known future trade dates.
Forward contracts can also be very useful for property deals, for either buying or selling, when the future date of a transaction is known but there is exchange rate uncertainty and the buyer or seller would like to lock in the value of the deal. Once you register with one of our money transfer providers, you will be able to discuss with them in detail your forward contract needs.

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