Foreign Currency Services

Forward Contracts

What are Forward Contracts?

A Forward Contract allows you to buy or sell one currency against another for settlement in the future at a predetermined rate and date.

Unlike Spot Contracts, a Forward Contract eliminates the risk of fluctuating exchange rates by locking in a price today for a transaction that will take place in the future. This is called hedging your expected foreign currency transactions.

What are the benefits/risks?

Predicting and protecting your future cash flow can eliminate some of the uncertainty of doing business abroad. You are protected against unfavourable movements in the foreign exchange market, however there is no opportunity to participate in favourable currency movements.

An example

You purchased inventory from a company in the United States and payment is due in three months. You decide to book a Forward Contract for settlement in three months which locks in the exchange rate.

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Foreign Exchange Calculator

The calculator should be used for indicative rates only and does not necessarily reflect the rates at which TD would be prepared to enter into any transactions with a customer. Customers who deal directly with Business Banking Foreign Exchange should inquire on TDFX or through their Foreign Exchange Specialist to receive rates tailored to their circumstance. TD assumes no liability or responsibility for any reliance or use that a customer may place on or make of the calculator.