American FX forward

A modification of the FX forward that allows continuous drawing on agreed nominal based on client’s needs.

How may we
assist you? 

Eliminate financial risk
of exchange rate
fluctuations

Transactions available in any currency in the KB currency table

Execute transactions on telephone from anywhere

We will notify you of every executed transaction

A team of experienced professionals at your service

BENEFITS OF THE AMERICAN FX FORWARD

  • We will assist you with currency risk hedging 

  • Our team of specialists will propose strategy and provide assistance 

USEFUL INFORMATION

  • Instrument for hedging currency risk resulting from potential adverse development of specific currency pairs
  • Modification of the FX forward that allows continuous drawing on agreed nominal based on client’s needs
  • Intended for individuals and legal entities, both Czech and foreign residents
  • Available in any currency shown in the KB currency table
  • Transactions executed by telephone with our dealers
  • Receive notification of agreed transaction parameters following each transaction
  • Counterparties agree and approve standard parameters – currency pair, nominal, and settlement date
  • American FX forward buyer may also request partial exercise anytime between the initial date and the settlement date  
  • If a buyer does not exchange the entire nominal prior to the American FX Forward settlement date, the remaining nominal is automatically settled on such date
  • Consult the Markets in Financial Instruments Directive
  • Receive current information about financial market developments
  • Potential profit or loss from transactions denominated in foreign currencies is affected by exchange rate fluctuations
  • In theory, profits or losses are not limited in any way

Example

  • Client and its bank enter into an American FX Forward with client selling EUR 1 mil to buy CZK
  • Agreed exchange rate: 27.950
  • Client undertook two exchange transactions – EUR 500,000 each
    • As of the first settlement, the spot exchange rate amounted to 27.900
      • Client hedged its currency risk and also generated profit of CZK 25,000
    • As of the second settlement, the spot exchange rate amounted to 28.000
      • Client incurred a loss of CZK 25,000; however, this loss represents hedging cost, provided the transaction was used as hedging
      • Hedging protects clients from significant exchange rate fluctuations that could result in substantial financial problems