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FX Forward

​​​​​​​​​​​​​​​​Minimize forex risks.

Forward rate booking minimises exposure to foreign exchange risks.​​​

 

Future foreign transactions.
Today’s exchange rates.

Worryfree oversea business transactions. Profits can be managed to be stable.

Service details
Profit and Loss Calculation

Forward Contract

A forward contract is an agreement between client and the bank to purchase or sell an amount of foreign currency at a prearranged forward rate on the contract date (more than two bank working days in advance) according to the currency, amount, and settlement date. Three alternatives are offered, as follows:

  1. Outright Forward is a forward contract that has a fixed settlement date
  2. Time Option Forward is a forward contract that allows for aflexible settlement dute within a specified and for multiple purchases or sales, but the whole amount must be fully utilized with in the agreed upon period. The exchange rate is fixed along period. The exchange rate is fixed along a specified period.
  3. Pro Rata Forward is a forward contract that allows for a flexible settlement date within a specified period and for multiple purchases or sales, but the whole amount must be fully utilized within the agreed-upon period. The exchange rate is fluctuated based on the actual settlement date.

Pro Rata Forward Rate calculation

Pro Rata Forward rate = base rate on transaction date + ((Swap Point per day) x n)

Premium/discount per day = (premium/discount) / N

N = Number of days starting from day 2 until the expiry date

n = Number of days starting from day 2 until the delivery date

 

Profit and loss calculation

Calculated from the difference between the forward rate and the spot rate on the delivery date, multiplied by the notional amount. If the forward rate is higher than the market rate on the delivery date, exporters will gain from their transactions. However, if the forward rate is lower than the market rate on the delivery date, importers will gain from their transaction.

Calculation example

Forward rate in USD/THB = 35.00, spot rate in USD/THB = 36.00, notional amount = US$1,000,000

Exporter: (forward rate – spot rate) x notional amount
: (35.00 – 36.00) x $1,000,000 = minus 1,000,000 baht >> The exporter will lose 1,000,000 baht in this transaction

Importer: (spot rate – forward rate) x notional amount
: (36.00 – 35.00) x $1,000,000 = 1,000,000 baht >> The importer will gain 1,000,000 baht from this transaction

Service Details

Conditions
  • A forward contract is a binding contractual agreement. It is not possible to predict prevailing market rates on the delivery date, and such rates might even be more favorable than the prearranged rate specified in the contract, such that the benefits of the more favorable market price may be lost
  • A seller or buyer of a forward contract must have an underlying transaction and must show evidence to the bank on the date of purchase unless special approval is granted by the Bank of Thailand
  • A forward contract credit limit is required for forward transactions
  • After the transaction is completed, the customer will receive a forward contract. The contract lays out transaction details including the settlement date. For Pro Rata Forward, the settlement date is the last possible delivery date. Forward Rate, Swap Point, Premium/Discount, Buying/Selling Amount. The customer's authorized signature is required and must be provided to the bank within 5 business days
  • A forward contract cannot be canceled unless evidence of the cancellation of the underlying transaction is shown to the bank, in which case the difference between the forward rate and the prevailing market rate will be calculated and settled
  • The transaction is subject to the regulations of the Bank of Thailand

Frequently Asked Questions

Can I purchase any currency?
Once the exchange rate has been locked in, can I make any adjustment to the transaction?
Where can I request a credit limit for a forward contract?
How can I cancel the contract?