Explained clearly. Calculated instantly.
Imagine you need to buy EUR 20,000 of goods from Europe in 3 months. Today, the euro has a known rate against your selected base currency, so you can estimate the amount you expect to pay.
But exchange rates move. If the euro strengthens against your base currency before the invoice due date, that same purchase will cost more than planned — reducing your margin and creating uncertainty in your cash flow.
An FX forward contract lets you lock in today’s exchange rate for a future date. You agree today to buy EUR 20,000 on the settlement date at a fixed forward rate. Whatever happens in the market after that, your cost in the selected base currency is protected.
The forward rate is derived from market conditions and interest rate differences between the two currencies. For simplicity, this tool applies an indicative forward adjustment to estimate your locked rate. Your bank or broker will provide the exact forward rate at the time of booking.
Indicative forward rate used here is for illustration only.
Cost: zero upfront. A forward contract costs nothing to enter. You only pay the amount on the invoice due date — exactly as agreed.
If your business is exposed to commodity prices — whether through energy costs, agricultural inputs, or raw materials — your costs can swing dramatically with global markets, and unlike FX, there is no peg or fixed rate protecting you.
FX hedging providers offer commodity hedging across three major categories:
Energy — crude oil, refined products, natural gas. Critical for logistics, manufacturing, and any business with significant fuel exposure. Energy prices can move 30–50% in a single year.
Agriculture — grains, edible oils, sugar, cotton, and other soft commodities. Particularly relevant for food manufacturers, traders, and importers of consumer goods.
Metals & Minerals — steel, copper, aluminium, gold, and industrial minerals. Key exposure for construction, contracting, and engineering businesses.
How it works: Your provider sets a baseline price for your key commodity. If the price moves beyond a threshold that threatens your margins, your treasury dealing desk contacts you with a ready-to-execute hedge recommendation — so you act at the right moment, not after the spike.
If you have a variable-rate bank loan, your monthly repayment can rise without warning as benchmark rates shift. A 2% rate increase on a USD 780,000 loan adds USD 15,600 per year to your costs — a significant and unpredictable burden for any business.
Your bank or financial institution can offer interest rate swaps to protect you against rising rates. An interest rate swap converts your variable-rate obligation into a fixed rate — you pay a predetermined fixed rate to your bank, and your bank pays your variable rate obligation. The net effect is that your interest cost becomes fixed and predictable, regardless of where benchmark rates move.
For example: on a USD 520,000 loan if the current variable rate is 5% and your bank offers a swap at 5.75%, you lock in USD 29,900 per year in interest costs. If benchmark rates rise to 7%, you are fully protected — your effective rate stays at 5.75% while the market pays 7%.