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Booking forward contracts to hedge foreign exchange risk

Booking forward contracts to hedge foreign exchange risk

François Cosnier avatar
Written by François Cosnier
Updated over a week ago

Businesses of all sizes face exchange rate risk when conducting transactions in foreign currencies with partners such as companies, suppliers, customers, subsidiaries, or parent companies.

Protection Against Exchange Rate Risk

Forward contracts offer businesses the opportunity to hedge against exchange rate fluctuations by locking in a rate for a specific amount of foreign currency, which can be used later, regardless of market changes during that period.

Types of Forward Exchange Contracts Offered by iBanFirst

iBanFirst allows its clients to subscribe to several types of forward exchange contracts:

  • Fixed Forward Contract: A rate is set for a given period, providing cost predictability.

  • Flexible Forward Contract: Allows some flexibility in managing amounts and maturities.

  • Dynamic Forward Contract: Adapts to market fluctuations, offering a more responsive approach.

Activation of Forward Exchange Contracts

Forward exchange contracts are additional services that must be activated via the iBanFirst platform and subscribed to by phone with your account manager.

Contact

To learn more about forward contracts and discover how they can benefit your business, contact your account manager.

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