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Forward Scoop

Possibility of implementing a currency forward for an agreed nominal amount for a more advantageous exchange rate than usual.

A Forward Scoop is intended for:

  • natural persons – entrepreneurs
  • corporate entities
  • Czech nationals and foreigners
  • clients who demand security for exchange rate risk resulting from possible negative development for the client of a specific currency pair
  • clients who speculate on the development of a specific currency pair

Characteristics of a Forward Scoop:

  • A Forward Scoop allows the client to implement at zero initial cost a currency forward for an agreed nominal amount for a more advantageous exchange rate than usual.
  • The resulting exchange rate depends on:
    • the fact whether the reference exchange rate was always found at a value within the band created by the Upper and Lower Barrier or not over the duration of the transaction
    • the Minimum and Maximum exchange rate.
  • If the reference exchange rate remains in the band between the Upper and Lower barrier for the whole duration of the transaction, the client gains the advantageous Maximum exchange rate.
  • If not, the exchange is implemented subject to the disadvantageous Minimum exchange rate.

Risk

  • The potential for profit or loss from transactions denominated in foreign currency is influenced by the movement of foreign exchange rates.
  • Theoretically, neither profit nor loss is limited in any way.
  • In the case of the Forward Scoop, the client does not know the exchange rate subject to which the nominal amount will be exchanged until the maturity date.
  • The resulting exchange rate may be the Minimum exchange rate, which is disadvantageous for the client, if the reference exchange rate does not stay inside the agreed band.
Example
  • A client (EUR exporter) sells EUR/buys CZK. Settlement of the transaction is one year from the date it is concluded.
  • The current market annual forward rate is 29.950.
  • The transaction nominal is EUR 1,000,000.
  • The Minimum exchange rate is 29.850, the Maximum exchange rate is 30.500.
  • The Lower barrier has a value of 29.500, the Upper barrier has a value of 30.500.
  • On the maturity date, the client sells EUR for the Maximum exchange rate if fixing of the reference exchange rate was always found in the band between the Upper and Lower barrier over the duration of the transaction.
  • If it was not always found in this band, the client sells the EUR for the Minimum exchange rate.

Advantages of a Forward Scoop concluded at Komerční banka:

  • zero initial costs
  • execution of exchange forwards at a substantially better rate
  • Forward Scoop can be arranged in all currencies stated on the Komerční banka exchange list
  • the transaction is always concluded by telephone with a Client transaction dealer
  • the client receives confirmation of the concluded transaction containing the agreed parameters of the transaction
  • at Komerční banka, a team of experienced professionals is at your disposal; they will propose an optimal strategy and are able to respond flexibly to developments on the market

A Forward Scoop allows you to:

  • appreciate your available funds on the foreign exchange market and profit from positive exchange rate developments

How to get a Forward Scoop?

  • contact your relationship manager
  • call the toll-free KB Info line on 800 521 521

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