Foreign Exchange Risk Solutions
By incorporating our foreign exchange risk solutions into your broader business strategy, we can help protect your profitability by managing your exposure to exchange rates – whatever your risk appetite.
The foreign exchange market is volatile, with unpredictable shifts leaving many importers and exporters vulnerable to significant revenue losses. To protect your profitability you need to manage foreign exchange as a business risk, and consider your foreign exchange strategy as integral to your business plan as distribution, logistics and marketing.
Irrespective of the Singapore dollar’s position, you can employ strategies to provide risk insurance, such as hedging, which allows you to lock in current exchange rates for future payment dates, protecting you from currency downturns and allowing you to control costs. At Travelex Global Business Payments, we offer forwards # as risk management solutions, and Holding Balances * as method to facilitate the currency risk.
Forwards
A forward contract offers certainty and protection by locking in the current rate for future use.
A forward is an agreement between you and Travelex Global Business Payments to buy or sell a fixed amount of foreign currency at an agreed rate, for a set period of time. You will enjoy pricing certainty by locking in a rate for future use, helping you to accurately budget, control costs and potentially protect your profit.
We offer two types of deliverable forward contracts:
A Forward Exchange Contract (FEC) is calculated using the spot rate for the relevant currency, adjusted by the forward points, which reflect the difference between the two countries’ interest rate expectations over the period of the contract.
A Par Forward lets you fix one rate for a series of forward dates. When we calculate a par forward rate we will take your specific payment dates and amounts into consideration.
| FEC | Par forward | |
|---|---|---|
| Cost certainty | Yes | Yes |
| Can pre deliver | Yes | Yes |
| Protect bottom line against adverse currency movements | Yes | Yes |
| One rate across several dates | Yes |
Non-Deliverable Forwards (NDFs)
We offer NDFs to help businesses manage their foreign exchange risks in countries with illiquid market or exchange control restrictions.
NDF is in essence a foreign exchange forward contract with the difference being the manner in which the contract settles at maturity.
For more details on how we can help you to manage your currency risk exposure please contact us on 6494 8226 or email sales@travelex.com.sg
Holding Balances *
Holding Balances let businesses of all sizes maintain reserves of foreign funds. The funds may be used to execute outgoing payments in the same foreign currency or may be converted into another currency at any time.
Used in combination with market monitoring and risk management tools, Holding Balances enable businesses to strategically buy foreign funds when the market is favourable and store them in anticipation of upcoming payment needs. Additionally, Holding Balances can be leveraged for cross currency settlement when a cross rate offers a greater potential for savings than the rate against the Singapore dollar.
Holding Balances are a great alternative to the numerous restrictions applied to traditional foreign currency accounts offered by the banks. This service is free, you can manage your Holding Balance online, and there are no account balance requirements so you never have to worry about keeping funds tied up just to meet a minimum account balance.
* Holding Balances are provided by Ruesch International, Inc. (A Travelex Global Business Payments Group Company). Holding Balances do not pay interest and funds cannot be kept in a Holding Balance for more than 90 days.
# Forward is provided by Travelex Global Financial Services (Singapore) Pte. Ltd.
