Fix your rate and future proof your plans with a forward contract from WorldFirst
Lock in an exchange rate for up to two years, protecting budgets from adverse currency fluctuations and helping to reduce risk.
What's a forward contract?
A forward contract lets you secure an exchange rate over a set period of time on a predetermined volume of currency.
With WorldFirst, a forward contract can be entered to facilitate payments for identifiable goods or services.
You’ll be able to lock in an exchange rate for up to 24 months.
Why hedge using a forward contract?
Locking in an exchange rate with a forward contract means you know exactly what exchange rate you’re getting, for a set time. This helps you predict cash flow so you can be smarter, more accurate and more competitive with your forward planning.
What can happen if I don’t hedge?
Without locking in a fixed rate (hedging), adverse market fluctuations could lead to losses for your business and result in increased prices for your products and services.
Six things to consider when hedging
During a forward contract, if the market rates move against you, you won’t lose out because your rate is secured. However, if rates move significantly against you, you may need to pay a margin call
You won’t benefit if a currency moves in your favour during your forward contract, though you may be able to take advantage of market movement with a spot contract
You must consider your risk appetite and evaluate your budget when pre-booking foreign currency. It may be worthwhile considering other strategies if you’re unsure of your requirements
You can enter a forward contract exchange with WorldFirst in order to pay an upcoming invoice in a foreign currency, or in preparation of an upcoming purchase in a foreign currency, but won’t be able to trade forwards for speculative purposes
There’s an initial deposit requirement associated with forward contracts, usually 5 or 10 percent depending on the length of your contract. Please reach out to our team, who can look to see whether you’re eligible for a credit facility to help cover this
- In New Zealand, forward contracts are only available to wholesale customers. Your dedicated account manager can provide more information on which businesses are eligible and how to get started
How to book a forward contract
If you're a new customer with WorldFirst
Once you’ve signed up for a World Account, you can find out more about what you need, from hedging strategies to currencies involved and length and rate of contracts by calling our team on +61 2 8298 4999.
We’ll clearly cover the below terms to ensure you’re comfortable with the conditions of the forward.
These terms include:
- The currencies involved
- The rate of the contract
- Tenure (length) of the contract
- Explaining deposit/initial margin requirements, in case a credit facility is needed
- Understanding if you’ll be using this (forward bought) currency in relation to the sale or purchase of goods or services, or for direct investment
If you're an existing WorldFirst customer
You can easily book fixed forward contracts online and window and flexible forward contracts by calling +61 2 8298 4999 and speaking to one of our team.
For fixed forwards, if you request a rate further than a spot contract (trade date, plus two days), you’ll receive a pop-up on your account informing you that you’re about to book a fixed forward contract with WorldFirst and that a deposit may be required.
Once you click “Accept Rate & Book Transaction” you’ll enter a legal contract with WorldFirst to buy or sell the currency you’ve selected.
For added transparency, you’ll also receive detailed information on how we calculate margin requests. This information is important in case your rate significantly moves during the tenure of your contract, thus requiring a margin call.
To get started, log in to your account.
Businesses Trust WorldFirst
- Almost 1,000,000 business have sent $300B around the world with WorldFirst and its partner brands since 2004.
- Your money is also safeguarded with leading financial institutions.
