Protect yourself against currency risk.
Let us help
A team of KB specialists will propose suitable strategy and assist you in the implementation.
Our dedicated team of dealers is available on the phone.
Entrepreneurs and legal entities – domiciled both in the Czech Republic and abroad.
About American FX Forward
- Instrument for hedging currency risk
- FX forward modification, with the possibility of continuous drawing on the agreed nominal
- Available in all currencies of the KB Exchange List
- Transactions are closed by telephone with our dedicated dealers
- After each transaction, you will receive information with agreed transaction parameters
You might also like to know
- Counterparties agree on standard parameters – currency pair, nominal, and settlement date
- In addition, buyer of an American FX forward is also entitled to request partial exercise anytime between the initial date and the maturity date which results in reduction of outstanding nominal
- In case the buyer does not exchange the entire nominal prior to the maturity date, the remaining amount of the nominal is automatically settled on this date
Important information for you
- Potential profit or loss from transactions denominated in foreign currencies is affected by exchange rate fluctuations
- In theory, neither profits nor losses are limited in any way
Example of risk
Check out this model example of risk:
- Client enters into an American FX forward with his bank
- Client sells EUR 1 million, buying CZK
- Agreed exchange rate: 27.950
The client then enters into two exchanges, with notional amount of EUR 500,000 each
As of the first settlement date, the current spot exchange rate was 27.900
- Client hedged his currency risk and also generated profit of CZK 25,000
As of the second settlement date, the current spot exchange rate was 28.000
- The client incurred a loss of CZK 25,000; however, if the transaction was executed as hedging, the loss represents the cost of hedging
- Hedging protects clients from significant exchange rate fluctuations that could result in their serious financial problems
- As of the first settlement date, the current spot exchange rate was 27.900