How to Fix a Foreign Exchange Rate – FX Forward Contracts

The Need For Foreign Currency

As an expat or someone with assets, liabilities or other financial commitments overseas, FX rates are always an important consideration. Some people regularly receive an income in a foreign currency, for example, a pension and have to convert it into their local currency. Others have regular outgoings in foreign currency, for example, school-fees or mortgage payments.

READ MORE: The Currency Risk of Drawing From Your UK Pension in Australia

READ MORE: What The Banks Don’t Want You to Know About Foreign Exchange

Foreign Exchange Market Risk

For those who convert currency on a regular basis as mentioned above, there is foreign exchange risk. A sudden change in a currencies value against another currency can have a dramatic impact on a person’s finances.

For example, if you regularly drawdown from your UK Pension in Australia and convert it into Australian Dollars, your retirement income will be impacted each and every month depending on the exchange rate at the time.

Moreover, if you have a regular outgoing, for example, a mortgage in another country, your payments will fluctuate each month. This can make longer-term financial planning difficult.

Your Solution: deVere FX Forward Contracts

A forward contract is an agreement that allows deVere clients to lock-in a favourable exchange rate. The rate is set on the day on which the agreement is signed, for a transaction that will be completed later.

Forward contracts are one of the main methods used to hedge against exchange rate volatility, as they avoid the impact of currency fluctuation over the period covered by the contract.

So if you have a regular financial commitment in another currency, or you are planning on moving a large amount of money in the future and you’re worried about currency fluctuations, deVere FX are here to help.



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deVere Insights is a proud component of the deVere Group. Our company has always prided itself on leading the way in the sphere of wealth management. This website is in place to share information and expertise.

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