Forward Contracts

By booking with Indigo FX you can protect your profit margin and ensure that you do not lose out with rate fluctuations

With rates fluctuating on a regular basis, a small variation in the rate could cost your business potentially thousands of pounds.

A Forward Contract can help you eliminate the risk exposure associated with rate movements and protect your bottom line.

Forward contracts let you to purchase currency now for a future settlement date, allowing you to secure a good rate when you see one. Indigo FX requires a 10% deposit to lock in your rate, and how you utilise the currency between purchase and the settlement date is up to you.

We Provide two types of Forward Contracts:

A Fixed Forward Contract

This is where you are able to fix the exchange rate at today’s value for a specific time in the future. Forward contracts are offered as far as 2 years.

Time - Option Contract

This is very similar to a Fixed Forward contract. The only difference is you’re able to start utilising the time option in part straightaway rather than at the maturity date of the contract.  Clients can utilise the contract in part, or in full, at any time between the dates you fixed the rate and its maturity.

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How does a Forward Contract work?

With a Forward Contract

A company needs to purchase $300,000 dollars’ worth of goods from its U.S based supplier in 6 months’ time. If the current exchange rate is $ 1.60 the goods today would cost £187,500. By entering into a forward contract you can secure the currency immediately and pay for it in 6 months’ time at the current exchange rate, meaning you know exactly how much you will pay on the settlement date.

WITHOUT a Forward Contract

However, if you did not commit to a forward booking at a price of 1.60, and instead decided to book on spot 6 months from today, and the Pound then weakened to $1.55, the actual cost to you would be £193,548.387. Meaning you have lost just over £6,000 of your profit margin compared to the rate you would have received 6 months earlier.