What is a forward contract?

Question

What is a forward contract?

Answer

A Forward contract is a tool that you can use to lock in an exchange rate for future use. If you know you will be either receiving or paying away in a foreign currency at a future date we can book that contract so that exchange risk is either minimised or completely negated.

This provides peace of mind and gives surety of forward revenues or costs.

We can put in place a contract that has a fixed settlement date, or a flexible ‘window’ forward that can be drawn down on at any pre agreed time. We also understand that delays can and do happen and we endeavour to be as flexible as possible with regard to settlement dates..

We can lock in your exchange rate up to 12 months in advance and are able to offer this deposit free in a majority of cases.

Forwards are usually slightly more expensive than spots trades, though this is currency and duration dependent.

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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 markets
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