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The Value Of Forward Contracts When Sending Money Abroad

GuidesThe Value Of Forward Contracts When Sending Money Abroad

When sending money abroad, it is likely you will find yourself worrying about foreign exchange rates and how you may lose out as a result. Exchange rates are constantly changing and if you get a good deal today, you may not get it tomorrow. When sending large amounts of money abroad, any small fluctuations can make a huge difference to how much you gain or lose. This is the big reason why forward contracts are a popular option for sending money abroad in the world of business.

The point of creating a forward contract is to ensure you don’t end up paying more than you’d like for whatever product or service you may be purchasing. When you enter a forward contract, you agree that you will pay a certain (fixed) amount in your own currency at a later date that will not change, no matter how much exchange rates may fluctuate.

Of course, both parties need to agree to the forward contact, so whether or not you are able to set one up depends on your relationship with the other company. Some may not agree to it as they feel they will be losing out, although often forward contacts are not difficult to negotiate, since neither party can predict the future such that they know which side will lose or gain from the deal.

At Pure FX, we offer a secure and reliable money transfer service for businesses that will ensure you get the best deal possible no matter what the exchange rates may be.

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