We receive payments in various currencies. Should we have a forward contract for each one?

Question

We receive payments in various currencies. Should we have a forward contract for each one?

Answer

Forward contracts can be a good hedging tool for whatever currency you deal in. This lets you know exactly how much you are going to be getting back from your exports once the client settles.

Due to interest rate differentials between different currency pairs the cost of a forward changes depending on what pair you are undertaking. A lot of my clients take the position that if they can get their currency locked in above their costing levels then they will usually cover their exposure.

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This question follows our webinar in March 2019 on ‘Managing Currency Risk’ and the answer comes from Bibby Financial Services.

Bibby Financial Services are challenging traditional FX suppliers. We are a trusted and competitive service that gives you greater value and clear benefits:

  • We are a leading independent financial services partner to UK business
  • We have over 35 years’ experience funding businesses
  • We get to know our clients who value our relationship-based approach
  • We have highly motivated and dedicated teams of experts on hand
  • We deliver tailored financial solutions that meet our clients’ ends
  • We are a global business and understand a wide range of industries and sectors
  • We have a unique understanding of trade cycles within the UK and international market
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