If your business makes regular payments in a foreign currency, whether to overseas suppliers, a foreign payroll, or for property completions abroad, you already carry currency risk. The rate you get when you actually make the payment may be meaningfully different from the rate you expected when you quoted the job, signed the contract, or set your budget. A forward contract is the cleanest way to eliminate that uncertainty.
A forward contract is an agreement to buy or sell a fixed amount of foreign currency at a fixed exchange rate, on a fixed future date. You agree the rate today. The exchange happens later. Everything in between, market movements, central bank decisions, political events, is your counterparty's problem, not yours.
Businesses use forward contracts when they know they have a payment coming up but want to protect themselves from the rate moving against them before it falls due. A manufacturer paying a Chinese supplier in 90 days, a property buyer completing a Spanish purchase in six months, or an exporter billing in US dollars who needs to convert revenue back to sterling, all of these are natural users of forward contracts.
A forward contract does not require you to predict where the market is going. It simply removes the uncertainty of not knowing. That is its entire purpose.
The process is straightforward. You tell your FX specialist that you need to buy, for example, euros in three months' time for a supplier payment. They quote you a forward rate based on today's spot rate, adjusted for the interest rate differential between the two currencies over that period. You agree the rate, sign the contract, and the deal is done.
On the settlement date, you transfer the sterling, and you receive the euros at exactly the rate you agreed three months earlier. The market could have moved sharply in either direction during that time. It does not matter. Your rate is locked.
Most forward contracts require a small deposit, typically around ten per cent of the contract value, held as margin. This is returned or applied to the payment on settlement.
Any business or individual with a known future currency commitment of meaningful size. The threshold is lower than most people assume. If a rate movement of two or three per cent would materially affect your margin, your budget, or your ability to complete a transaction, a forward contract is worth considering.
Common use cases include importers paying overseas invoices on 30, 60 or 90-day terms, businesses with foreign-currency payroll, property buyers in the process of completing a purchase abroad, and companies that price contracts in foreign currencies and cannot absorb exchange rate variation in their margins.
Forward contracts are not speculative. You are not betting on where the rate goes. You are removing a risk that already exists in your business. There is a difference between a business that uses forward contracts to protect a known payment and a trader who buys currency hoping to profit from a move. Dinheiro works exclusively with the former.
They are also not complicated. Setting up a forward contract with Dinheiro takes a single conversation with your relationship manager. You explain the payment, the currency, the amount and the timeframe. We handle the rest, clearly, transparently and with no hidden fees.
A forward contract can be set up in a single call. Speak to a Dinheiro specialist and lock in your rate today.