A Spot Foreign Exchange Transaction involves the purchase of one currency against the sale of another at an agreed price for delivery on a value date which is usually the trade date plus Two Working Days, the traditional ‘spot value’.
Exchange4free are able to quote our clients very competitive exchange rates across over 100 currency pairs and transfer this money worldwide at low costs:
Forward Exchange Rates (FEC's)
Exchange4free offer Forward Exchange Contracts (FEC's) across a wide range of major and exotic currencies.
Forward contracts allow you to lock in an exchange rate immediately without having to pay for the purchased currency until a future date.
The forward exchange rate is calculated by using the current exchange rate plus an interest differential (being the difference between the interest rates on an annualised basis for the length of the forward contract).
The forward exchange rate is a function of the current exchange rate and interest rates of the two currencies involved and is not a forecast of the future direction of the exchange rate.
Forward exchange contracts usually require a deposit. This allows you to utilise the majority of your funds until the end of the forward exchange contract when the funds are exchanged.
A forward exchange contract allows you to reduce your exchange rate risk by locking in a rate now even though the actual transaction will only take place at a later date. In this way, you are able to 'lock' in a fixed rate now for future use and as a company you can be sure of the cost of your purchased currency before you actually need it.