FORWARD CURRENCY CONTRACT & OTHER CURRENCY CONTRACTS
FORWARD BUYING
A Forward currency contract is when you fix the exchange rate of your Australian currency at today’s rate but don’t pay for your currency until some point in the future, (buying now paying later) you can do this up to 2 years ahead.
In order to forward buy currency you need to put down a 10% deposit and pay the balance on or before the pay later date.
Using a Forward contract is a great way to buy your currency if say you have a house to sell and so won’t have the funds just now.
A forward contract can be used to protect you from adverse currency movements and can enable you to lock into favourable exchange rates NOW rather than missing out.
Of course it may not be appropriate to have a Forward contract to buy your Australian currency; it will depend on what the exchange rate is doing when your ready to buy.
SPOT CONTRACT
A spot contract is when you buy your Australian Currency and pay for it straight away.
You would do this if you have all the funds available to pay for the transaction and the exchange rate is favourable or you have an urgent requirement for Australia currency.
YOU WANT TO WAIT TO BUY AT THE BEST TIME
They can’t predict the future but your currency specialist will have knowledge of the past performance of the currency along with other market information.
Based on the conditions at the time your currency specialist will be able to give you some indication of the exchange rate you would be looking to buy your currency at. You will be able to discuss with your currency specialist the optimal rate you would like them to buy your currency at.
If you are waiting for your optimal exchange rate you will need to provide HIFX with two figures.
- A minimum rate of exchange level you require your currency to be bought or sold. This is known as a stop loss order because it effectively protect you from adverse currency movements by guaranteeing a minimum exchange rate.
- The level of exchange rate at which, if achieved in the markets, you will buy or sell required currencies. Known as a limit order
Running a Stop Loss Order in parallel with a Limit Order means that you will effectively set upper and lower currency trading thresholds, making your currency transactions more predictable with rates guaranteed within a given range.
As flexibility is crucial, HIFX would constantly monitor your order levels and would contact you for approval to amend them as appropriate.
HIFX experts watch the currency market 24 hours a day so once you have agreed your requirements with them they can go ahead and do the deal for you.
Would you like to learn more about a forward currency contract and spot buying currency?
Give your friendly HIFX currency specialist a call on +44 (0) 1753 752 740 for an obligation free discussion.
Or if you prefer they call you just follow the link. and fill in your contact details. It’s that easy 🙂