FX Forward

Guaranteed exchange rate at a required future date.

How may we
assist you?

Protection from FX
risks with pre-agreed
exchange rates

Combine with clean payments or
documentary instruments.

Transactions available in any currency in the KB currency table

Negotiate each transaction with a dealer over the telephone or online

Assistance and proposed strategy by a team of specialists

Review parameters of every transaction

USEFUL INFORMATION

  • Purchase or sell one currency for another one at an exchange rate agreed by the transaction parties in advance
  • Intended for individuals, legal entities, and municipalities – both Czech and foreign
  • Transaction settlement with a forward value date (i.e. more than 2 business days from the trade date)
  • FX forwards are available in all currencies listed in the KB currency table
  • FX forwards may be combined with outgoing clean payment, documentary collection or documentary letter of credit transactions
  • Transaction is concluded over the telephone with Sales dealer or online using the KB eTrading application
  • Receive transaction confirmation of each transaction for verification purposes – with key transaction parameters; for KB eTrading transactions, the parameters of executed transactions are archived directly in the application
  • Team of experienced professionals, who can propose suitable hedging strategies and respond quickly to market developments, at your service

Available modifications 

Non-deliverable forward

  • Currency forward, where the actual exchange of amounts in purchased/sold currencies does not take place
  • Counterparties agree on settlement in one of the two currencies of the relevant currency pair – so–called reference currency
  • One or two business days (depending on the given currency) prior to the transaction settlement, the settlement amount in reference currency is calculated based on the difference between current spot exchange rate and previously agreed forward exchange rate
  • Net position is then settled in the reference currency – by the short (by the party in disadvantageous position) party

Par forward

  • Set of currency forwards that differ in a single parameter – maturity date
  • 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 of risk

  • Client enters into a currency forward with its bank
  • Client sells EUR 1 million, buying CZK, with transaction settlement in a month
  • Agreed exchange rate: 27.950
    • As of the settlement date, the current spot exchange rate is 28.000
      • If executed as speculation, the client incurred a loss of CZK 50,000
      • If executed as hedging, the client views the loss as the cost of hedging
      • Hedging protects clients from significant exchange rate fluctuations that would result in their serious financial problems