A forward contract can be advantageous, as it allows you to lock in today's exchange rate for foreign currency transfers at a later date. When exchange rates between currencies fluctuate, this stability can provide peace of mind..
How do Forward Contracts work?
When you know you'll need to transfer funds internationally at some future date, one option worth considering is a forward contract, as it locks in a particular exchange rate for an agreed upon period. Where a spot deal goes out to two days, a forward contract can run from two days to 12 months.
For this sort of contract, the exchange rate is called the forward foreign exchange rate. It's agreed at the outset of the contract and allows you to either buy or sell at that rate. The contract is valid for a fixed period, ending at the set maturity date.
The spot rate is adjusted for forward points, in order to set the forward foreign exchange rate. An industry-wide standard formula is used to determine the forward points, taking into consideration the interest rates for both currencies and the time to maturity of the contract. This somewhat limits the variation in rates between competitors to just the difference in spot rates.
What are the features of a forward contract?
The International Payments Price Promise
In order to offer clients competitiverates, the Travelex International Payments service constantly monitor the exchange rates of our main competitors and the major banks. We’re so confident that we offer the best deal that we pledge to beat any cheaper price you can find within 30 minutes of our quotation. That is the International Payments Price Promise, which you can see here*.
The Travelex International Payments service will quickly and easily provide you with cost effective international fund transfers. Just ask your bank for their rate and compare it with ours. Our goal is to help you see substantial cost and time savings from the service.
If you have any questions or would like clarification, please contact us – a customer service representative will be happy to help you. They're available 24 hours per day, Monday through Friday, to answer any questions about forward foreign exchange contracts or any other services offered.
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Contact us to speak to the customer service team 24 hours a day Monday – Friday for assistance with forward foreign exchange contracts and many other services.
Travelex International Payments service is provided by USForex
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