Fix your rate to protect against market moves with a Forward Contract

All Forward Contracts are subject to approval by OFX. Conditions vary per market.

You might consider a Forward Contract if you’re committed to making a payment for goods or services in the next few months – like paying suppliers or your mortgage for your property abroad. You need to be sure that the goods or services are definitely going to be delivered by the supplier because you can’t cancel a Forward Contract. You can also use a Forward Contract if you have an incoming payment, but you need to be certain that the payment will be made.

To continue to take advantage of exchange rate movements, some customers use a Forward Contract for only part of their liability as a way to partially hedge against volatility.

The exchange rate you’ll receive takes into account the market rate on the day you book your Forward Contract, a margin charged by OFX, and the central bank interest rates for the currencies you are exchanging.

You may be asked to pay a deposit when you book a Forward Contract. This is a fixed percentage of the value of the transaction – this is most often 5% for a business account and 10% for a personal account. However, this could be more or less depending on the duration and assessment of the Forward Contract, credit limits, and other factors. Your deposit is held until the maturity date specified in the Forward Contract. Please note, you must pay the remaining balance of the total amount due which is the difference between the Forward Contract and your deposit, in addition to any applicable fees by the maturity date. For more information contact an OFXpert. 

*If you book a Forward Contract, it may mean losing out if the market rate improves because you’re contracted to settle at the agreed rate. Read more.

Businesses may apply for a credit limit which means your notional mark-to-market exposure may exceed the value of your Forward Contract up to the specified limit. If granted, we will only require an advanced payment to be posted once the specified limit is exceeded.

You have the option of early delivery at any point during the contract’s lifetime. For example, if you have bought €50,000 for use in 12 months, in 3 months’ time you could decide to make a payment using €10,000. When your Forward Contract matures you will need to settle the remaining amount. If you choose to deliver earlier than your agreed maturity date, the exchange rate may differ to your original contract.

If you want to cancel a Forward Contract, speak to your OFXpert as soon as possible. If we can cancel a Forward Contract, we sell back the currency that was bought at the time of booking, based on the current market rate. If the value of the currency you have asked us to exchange has decreased, a loss will be incurred on the Forward Contract. In this case, you will be liable to cover the loss, together with any reasonable expenses or other costs we incur as a result.

Please note: Booking a Forward Contract may mean losing out if the market rate improves because you’re contracted to settle at the agreed rate. Read more about considerations when booking a Forward Contract.

Forward contracts typically start at US$10,000 but lower amounts may be considered.