Foreign Exchange Home home sitemap contact OzForex NZForex UKForex Tranzfers  
Add to your favorites  
Business Foreign Currency TransfersForeign Exchange ResearchResearchFor Your WebsiteSite Map
Currency Converter

Forward Payments & Contracts


Forward contracts allow you to lock in an exchange rate immediately without having to pay for the purchased currency until a future date. The forward contract eliminates the effect that fluctuations may have on your foreign exchange transfer. The forward exchange rate is calculated using the current exchange rate and interest rates for the two currencies and the time or length of the contract. The forward exchange rate is a function of the current exchange rate and interest rates of the two currencies involved and is not a forecast of the future direction of the exchange rate.

Forward contracts usually require a deposit which allows you to utilise the majority of your funds until the end of the forward contract when funds are exchanged. Forward contracts also reduce your exchange rate risk by locking in a rate now even though the actual transaction is not taking place until a later date. This allows you to be sure of the cost of your purchased currency before you actually need it.

Example

Many of our customers who import goods and have to pay in foreign currency are concerned that adverse exchange rate movements will increase the amount of local currency they will have to pay when they convert to foreign funds.
Next Steps:
Frequently Asked Questions
Email Me More Information
Register for Live Quotes
Related Information:
Forward Hedging Guide
What are Limit Orders?
Available Payment Types
Supported Currencies
Minimum Amounts
Contact Us for More Information


This risk can be managed by using a forward contract.

ABC Ltd plans to import goods from the United States, with payment of 100,000 US Dollars to be made in 3 months time. If they were to put through a spot transaction at today's exchange rate of 0.6700* they would only have to pay AU$149,000.

If the exchange rate falls 10% between today and when they convert their funds, to .6030 then they would have to pay AU$165,000.

ABC Ltd decides they do not want to take this risk and decide they would prefer to 'lock in' a rate today that will be used for the transfer in 3 months. They do this by booking a forward contract with OzForex at 0.6700. This contract is binding on both parties. ABC Ltd must give OzForex a deposit of 5% to ensure the performance of the contract. Just before the 3 months passes, ABC Ltd remits the AUD$149,000 (less the 5% already paid) to OzForex and then OzForex pays the USD$100,000 to ABC Ltd's suppliers account in the United States. OzForex charges no fees and there are no hidden costs.

Important note

Once the forward contract is booked it is binding. This means that in the above example ABC Ltd could not benefit from any increase in the value of the Australian Dollar, if that occurred. It also means that if ABC Ltd was unable to complete the transaction by paying OzForex the expected Australian Dollars, the contract would be terminated and any loss that occurred would need to be paid to OzForex by ABC Ltd (normally out of the 5% deposit).

To get started email us at dealers@ozforex.com.au detailing your circumstances and we will send you more information.




Please email info@singforex.com.sg for more details or fill in the form below. You will be emailed a PDF guide to transferring money with OzForex. To view the file you will need the free Adobe Reader software which can be downloaded by clicking on the icon below.

Business FX
 ° General
 ° Importers
 ° Exporters

Personal FX
 ° General
 ° Overseas Purchase
   (House, car, boat, etc.)
 ° Living Overseas
 ° Migration
 ° Overseas Investments

Services
 ° Immediate Payments
 ° Forward Payments
 ° Int. Wire Transfers
 ° Limit Orders
 ° International Receipts

More Information
 Why You Will Save
 Safety Of Your Money
 Case Studies
 Testimonials

Foreign Exchange Reference
 Basics of Forex
 FX Market Participants
 Market Forces
 Market Regulation
 Forex Glossary
 Currency Options
 For Corporations
 For Portfolio Managers
Home Page Regulation Privacy Policy Complaints Website Terms Contacts & Support Money Laundering Statement

IMPORTANT: This information has been prepared for distribution over the internet
and without taking into account the investment objectives, financial situation and particular
needs of any particular person. SingForex makes no recommendations as to the merits of
any financial product referred to in this website, emails or its related websites.

AFMA

Regulated in Australia by ASIC (AFS Licence number 226 484)
© Copyright OzForex Pty Ltd ABN 65 092-375-703
Member of FICS (Financial Industry Complaints Service)

Full Member of AFMA (Australian Financial Markets Association)

Go to top