Fix your rate and future proof your plans with a forward contract from WorldFirst
Lock in an exchange rate for up to two years, protecting budgets from adverse currency fluctuations and helping to reduce risk.
What's a forward contract?
A forward contract lets you secure an exchange rate over a set period of time on a predetermined volume of currency.
With WorldFirst, a forward contract can be entered to facilitate payments for identifiable goods or services.
You’ll be able to lock in an exchange rate for up to 24 months.
Why hedge using a forward contract?
Locking in an exchange rate with a forward contract means you know exactly what exchange rate you’re getting, for a set time. This helps you predict cash flow so you can be smarter, more accurate and more competitive with your forward planning.
What can happen if I don’t hedge?
Without locking in a fixed rate (hedging), adverse market fluctuations could lead to losses for your business and result in increased prices for your products and services.
Six things to consider when hedging
During a forward contract, if the market rates move against you, you won’t lose out because your rate is secured. However, if rates move significantly against you, you may need to pay a margin call
You won’t benefit if a currency moves in your favour during your forward contract, though you may be able to take advantage of market movement with a spot contract
You must consider your risk appetite and evaluate your budget when pre-booking foreign currency. It may be worthwhile considering other strategies if you’re unsure of your requirements
You can enter a forward contract exchange with WorldFirst in order to pay an upcoming invoice in a foreign currency, or in preparation of an upcoming purchase in a foreign currency, but won’t be able to trade forwards for speculative purposes
There’s an initial deposit requirement associated with forward contracts, usually 5 or 10 percent depending on the length of your contract. Please reach out to our team, who can look to see whether you’re eligible for a credit facility to help cover this
- In New Zealand, forward contracts are only available to wholesale customers. Your dedicated account manager can provide more information on which businesses are eligible and how to get started