Currency forward contract: A guide for your FX needs

Article
Euan Robb

Navigating the foreign exchange market can be complex, but with the right tools and knowledge, you can make informed decisions to get the most out of every transaction.

One such tool that has gained significant traction among businesses and individuals is the "currency forward contract", also known simply as a "forward contract". In this article, we’ll break down its concept, benefits, and how Equals Money’s international payments service can facilitate transfers for all your FX needs.

About Equals Money

What is a currency forward contract?

At its core, a currency forward contract is an agreement between two parties to buy or sell a specific amount of foreign currency at a predetermined rate, set for a future date.

This means that you can “lock in” a rate today for a transaction that will take place weeks, months, or even a year from now.

Why would someone use It?

  1. Protection against volatility: The foreign exchange market is notorious for its unpredictability. A currency forward contract can help protect you against volatility and exchange rate fluctuations by setting a fixed rate for future transactions.
  2. Budgeting and planning: For businesses, especially those with regular international transactions, knowing the exchange rate that will be used for future transactions can assist in accurate financial forecasting and budgeting.
  3. Peace of mind: Whether you’re purchasing property overseas, paying international suppliers, or simply sending money abroad, a forward contract takes away the worry of the FX market’s unpredictable nature.

Equals Money: Your trusted FX partner

When you’re dealing with international payments, it's crucial to have a reliable partner to guide you through the intricacies of the foreign exchange market. Here’s why Equals Money should be your top choice:

  1. Experience: With 18 years of dedication to the FX industry, we understand its complexities and nuances, and have helped our customers move over £10 billion around the world since 2005.
  2. Currency variety: Make same-day and next-working-day payments in 140+ different currencies.
  3. Tailored solutions: Not every transaction is the same. We provide bespoke solutions and payment options suited to individual needs.
  4. Dedicated expertise: Your dedicated account manager will monitor the markets, get to know your business, help strategise your transfers, and ensure your international transactions are smooth and hassle-free.

How do I start using forward contracts?

Getting started with Equals Money’s international payments service is simple:

  1. Request a quote: Using the Equals Money website, simply let us know of your payment requirements by requesting a quote and leaving your details and a member of our team will be in touch.
  2. Speak to our experts: A member of our team will be in touch to discuss your foreign exchange needs, and guide you on the best solutions.

Final Thoughts

In an ever-evolving global economy, having the right tools to manage your foreign exchange transactions is paramount. Currency forward contracts offer an effective solution to protect yourself from the unpredictability of the FX market. By choosing Equals Money as your FX partner, you’re choosing reliability and expertise when making cross-border transactions.

Request a quote

Equals Money can only offer forward contracts to facilitate payments for goods and services.

When using a forward contract, should the rate continue to move after the contract has been agreed, you’ll still receive the original agreed exchange rate, presenting a potential disadvantage in choosing a forward contract. However, many looking to make international payments find the stability offered by a forward contract outweighs this disadvantage.

Expert insights on demand

Sign up to our daily market reports to get the latest news and insights on worldwide currency movements straight to your inbox every morning.

Enter your email address below to subscribe.