Currency forward contracts for future international payments

A currency forward contract lets you agree an exchange rate for a specified amount and an agreed future payment date. This gives you certainty over the exchange rate you'll use rather than waiting to see what the market rate is when the payment becomes due.

This can be useful when you know you'll need to make a large international payment in the weeks or months ahead, such as a property completion, supplier payment or other planned expense.

If the market later moves in your favour, you won't benefit from that movement on the amount covered by the forward contract. A deposit is required when the contract is booked, and changing or cancelling the contract may involve a cost.

✓ Plan a known future cost

Know the exchange rate you'll use before your payment is due.

✓ Reduce exchange-rate uncertainty

Avoid leaving the exchange rate for a planned payment entirely to the market on the payment date.

✓ Match the contract to your payment date

Arrange the exchange around a known future payment rather than exchanging all the money immediately.

If your payment date is more flexible and you'd rather wait to see if a particular exchange rate becomes available, a target rate order may be another option. You set the rate you're looking for and the order remains active for an agreed period.