Foreign exchange forward contract

Allows you to protect yourself against future exchange rate fluctuations, usually for periods of up to 12 months.

Exchange rate is locked in for a specific future date (or series of dates) for the purpose of purchasing or selling foreign currency.

Offered in most currencies in amounts of $20,000 or more.

Advantages

• Guarantees that a rate will apply at a future date: you can choose a specific date or a 30-day option for partial foreign currency transactions (minimum amount $5,000).
• Protects your accounts receivables from exchange rate fluctuations; you know what rate will apply when payment is received.
• Simplifies the implementation of a selling price policy; makes determining the price of your products in foreign currency easier because you know what exchange rate will apply when you receive payment for them.
• Also allows you to lock in the dollar value of a debt denominated in a foreign currency when payable at a later date; prevents the cost of your supplies from being affected by a drop in the loonie.

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