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Ups and downs in the currency market can affect your import payments and export receipts. Here are some products you can use to minimise your risk.
This is simply an agreement to buy or sell one currency in exchange for another. You settle the contract immediately, at a price based on the current exchange rate ('spot').
Known as FECs, these let you set an exchange rate that you can use for foreign currency requirements on a specific future date. So whatever happens to the exchange rate you’ll know your income or cost in New Zealand dollars.
ProsThese protect you if the exchange rate moves in the wrong direction over a specified time, but also let you get the benefits if the exchange rate moves in your favour.
Pros