Currency Exchange - Buy Now, Pay Later

Currency exchange isn't just a matter of handing over your pounds and receiving back foreign notes over a bank, post office or bureau de change counter. There can be far more to it if you need more than just a bit of holiday money. This guide provides an insight to Forward Contract currency exchanges, and explains when this type of arrangement is best used.

Currency Exchange: Forward Contract Basics

The currency exchange market can be a volatile, risky place, with rates fluctuating rapidly. This can mean a big headache for anyone looking to make overseas business deals or purchase foreign property in the future. What might seem like a good deal or investment now, could prove to be a disastrous one in a year's time if foreign currency exchange rates alter dramatically, leaving you out of pocket. A forward contract is a "buy now, pay later" solution to currency exchange.

Currency Exchange: When to Use Forward Contract

Property buyers are the most frequent users of forward contract, because they know that the weeks it takes to close a transaction could mean the difference between an excellent currency exchange rate and a poor one. Hoping that the exchange rate will remain stable or even improve is a massive risk, and could cause great loss in profits. Forward contracts are also ideal for large corporations looking to minimise the risk on overseas deals.

Currency Exchange: How Forward Contract Works

Forward contracts help you lock into a favourable deal on currency exchange rates, by securing you the current rate for up to two years. You or your company simply pay a 10% deposit upfront, then settle the remaining balance on the delivery date of the contract. This has the added bonus of meaning your balance can sit in your bank account gathering interest whilst you finish the deal you're involved in.

Currency Exchange: Other Options

Forward contracts are just one of the more alternative options for currency exchange. You could also protect yourself against a sudden adverse movement in foreign exchange rates by using a Stop Loss. This enables you to buy your currency at the minimum rate you have specified, by automatically purchasing your currency if the exchange rate drops unexpectedly. In contrast, you can take advantage of sudden favourable movements using a Limit Order. State what your ideal exchange rate is, and the currency will be automatically purchased if the rates reach your desired level.

Speak to Foreign Currency Exchange Ltd About Your Currency Exchange

Foreign Currency Exchange Ltd is a commercial currency broker based in the UK. We help thousands of clients move hundreds of million pounds across the globe every day. From large businesses to private individuals who wish to send regular payments abroad, you can save money by getting a better currency exchange rate than your bank. Foreign Currency Exchange buys currency at wholesale rates and can help you save money with our fast secure service. For more information contact us now, telephone +44 (0) 20 7989 0000 or email info@fcexchange.co.uk.