We’ve put together a selection of what we think are the best accounts for currency-forward contracts. You can also request multiple quotes from providers to compare currency forward contract rates to get the best exchange rates. A currency forward is simply a way of buying currency now at the current exchange rate for a settlement date in the future. When you do the conversion, you put down a small deposit, then pay the balance on the date you need the full amount. Currency forward contracts are one of the most common ways to reduce and hedge currency exposure for businesses or protect against adverse exchange rates when buying a property overseas.
Best Currency Forward Contract Providers
|Currency Forward Provider||FX Forward Lengths||Number of Currencies||Min Transfer||Same Day||Currency Options||Our Rating||Get Quote|
|12 months||42||£1,000||✔️||❌||Request Quote|
|12 months||55+||£250||✔️||❌||Request Quote|
|24 months||30+||£3,000||✔️||✔️||Request Quote|
|24 months||40||£100||✔️||❌||Request Quote|
|12 months||40||£100||✔️||❌||Request Quote|
TorFX: Best currency forward provider 2023
TorFX offers forward currency contracts of up to twenty four months for those wanting to lock in the current exchange rate. They provide a personal service where you can ask for price alerts, advice on market timing and also protecting your budget through currency forward contracts.
- 24-month currency forwards
- Personal service
- Part of a large group
- No currency options
Currencies Direct: Best fx forward provider for customer service
Currencies Direct offers forwards on over forty currencies of up to 12 months through a network of 22 offices worldwide and serves more than 325,000 personal, business and online selling clients. You can do forwards online, through the company’s app, in one of its branches or over the phone with the help of an account manager.
- 12 month currency forwards
- Expert advice
- Great exchange rates
- No currency options
- 12-month currency forwards
- Expert advice and personal service
- Forward contracts on 42 currencies
- Better for larger currency forward contracts
OFX: Zero transaction fees on currency forwards
OFX offers currency forwards up to 12 months and does not charge any fees on top of the exchange rate you get. Exchange rates are of course bank-beating and are based on size, so the larger your transaction the better the rate you will receive.
- 12-month currency fowards
- Bank beating exchange rates
- Personal service and advice
- No currency options
Global Reach Partners: Best for corporate currency forwards
Global Reach offers a range of currency hedging solutions for individuals and businesses including currency forwards of up to two years. Global Reach provides forwards on a wide range of leading currencies as well as a selection of exotics. Using their expert dealing team, you can handle important transfers overseas.
- 24 month currency forwards
- Currency hedging experts
- Currency options
- High minimum transfer
❓ Methodology: We have chosen what we think are the best currency forward contract providers based on:
- 20 years in the currency forward industry
- Interviews with the currency forward provider CEOs and senior management
- Over 17,000 votes in our annual awards
- Analysis and testing of the platforms and pricing
Request Currency Forward Exchange Rate Quotes
To find the best currency forward exchange rates you can compare currency forward quotes to get a currency forward quote from our panel of currency brokers. Each FX forward provider will send you a quote based on the currency exchange rate and your forward settlement date.
Note: It is important to note that currency forward quotes will change as the underlying currency exchange rate moves and the individual interest rates associated with the currency pair’s country change.
How To Buy Currency Forwards
To buy a currency forward you need to follow these steps:
- Open an account with a currency broker that offers currency forwards like OFX, or Key Currency.
- Select a date in the future that you want the forward to settle (this can be up to 24 months).
- Request a quote – your broker will then give you a forward price (this will be based on the interest rates of the two currencies you are exchanging
- If the quote is acceptable, agree to the deal. You will have to put down a small deposit of the value of the transaction to cover market fluctuations.
- When the settlement date arrives deposit the remainder of the funds with your broker and withdraw or transfer the foreign currency.
For more information, you can watch our video discussion on how forward currency contracts work.
What Can Currency Forwards Be Used For
Currency forwards are used for locking in the currency exchange rate for a currency conversion in the future. In this video we discuss the most common reasons for using a currency forward including:
- Buying a property abroad
- Locking in profits from an upcoming foreign property sale
- Budgeting for foreign income
- Budgeting for recurring international payments
- Locking in an exchange rate for an upcoming foreign invoice
Advantages Of Currency Forward Contracts
- Reducing risk – protecting your budget from currency prices moving against you
- Locking in profits – If you are budgeting you can use a currency forward to lock in profits on a foreign transaction or make sure that an upcoming foreign property purchase does not cost you more than the currency exchange rate.
- Cost effective – currency forwards generally shouldn’t cost any more in (exchange rate) fees than a normal transaction. They are cheaper than buying a full amount of currency outright.
- Flexibility – you can draw down early on a currency forward by reducing the position if you need some foreign currency early
Disadvantages Of Currency Forward Contracts
- Loss of positive gains – If you buy a currency forward contract early then you miss out on exchange rates potentially moving in your favour. Of course, no one can predict where a price may be in the future so with large foreign exchange transactions it is often prudent to err on the side of caution.
- Deposit protection – currency brokers are not covered by the FSCS so if a currency broker defaults your deposit and position are not protected by UK regulators
- Commitment – unlike futures and options currency forwards must be carried to settlement. You cannot close a currency forward before the settlement date without incurring significant costs.
Currency Forwards For Individuals
Individuals can use forward contacts if they have an upcoming purchase and want to fix the current exchange rate. The process is very simple and can be done online in a few clicks. If for example you are buying a property abroad and have to make a final payment of EUR500,000 in three months time. But, you think the EURGBP rate will move against you over that period, you can use a currency forward to buy the EUR now, but not have to pay the GBP for another three months.
For example: In this scenario a couple are buying a holiday home in Italy for EUR 500,000. The couple have agreed a price with the seller in Italy, but the money does not need to be paid for another 6 months. However, the couple are worried that the GBPEUR exchange rate may move against them and therefore cost them more.
- At the current exchange rate of 1.1755 (1/2/17) buying EUR 500,000 would cost £425,350.
- However, if this rate moved to 1.1149 in 6 months time then EUR 500,000 would cost them £448,000.
- This is only a move of 4.5%, if you look at the 3 month GBPEUR chart you can see this is quite possible.
- In this case had the couple locked in the current exchange rate they would have saved £22,650
Currency Forward Contracts For Businesses
If your business is importing, exporting or exposed to foreign currency in any way, then using forward currency contracts to hedge and manage the risk of currency fluctuations is essential. Businesses can use forward contracts to lock in a current foreign exchange rate for overseas transactions. The key benefits for companies is that they are able to account accurately for international business in forecasts and budgets.
In the same respect a business must protect itself from adverse currency moves. If a business buys goods from Italy with a few to selling in the UK they can lock in the current exchange rate to protect profits.
For example, here we demonstrate how a currency forward can protect a business’s profit margin.
- At the current exchange rate of 1.1755 (1/2/17) paying a supplier, EUR 500,000 would cost £425,350.
- However, if this rate moved to 1.1149 in 6 months’ time then EUR 500,000 would cost the business £448,000.
- This is only a move of 4.5%, if you look at the 3-month GBPEUR chart you can see this is quite possible.
- In this case if the business was expecting to make a profit margin of 10% on the sale of imported goods the adverse currency move would have in effect halved their profits.
Currency Forward Contract FAQs
Between 12 and 24 months. Of the brokers we feature, Global Reach Partners and TorFX offer the longest dated currency forwards up to two years.
Currency forwards are quite complex to price, so the best way is to compare one currency brokers quote against another. You can do this in our currency forward contract account comparison table.
Yes, once you have an account with a currency broker that offers forward contracts you can request live quotes and get currency forward quotes online 24 hours a day for up to a year in advance. You can also check currency forward rates over the phone with experienced dealers who can also advise on currency forward pricing potential movements.
Currency forward contract prices are based on the difference between the underlying interest rates of the currency pairs involved in the transaction and added or subtracted from the spot rate.
Customers can drawdown funds on currency forwards before they are due to settle. But, all currency forward contracts have to be ultimately settled. This can be done by opening currency forward to net off the contract and effectively have two forward contracts running to the same settlement date, making you flat, which is the equivalent of closing a forward.
Yes. If a customer requires funds later for settlement, the forward contracts can be rolled over ahead of settlement (essentially bought and sold for different dates).
Yes, you can buy or sell a currency for a forward date essentially protecting from up and downward currency moves.
Currency forward contract fees are built into the exchange rate and marked up from where a currency broker buys or sells the currency forward.
You should discuss tax issues directly with your currency broker or financial advisor.
You can trade currency forward contracts on most G10 currencies. However, some currency brokers offer more currencies than others, OFX for example offers over 55 currencies.