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This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.

Forward Contracts Page 1

It can be frustrating having to keep up with the latest foreign exchange rate movements when you’re changing up your money, whether for business or pleasure. What if there was an easier way, where you can instead rely on a trusted brokerage to undertake the time-consuming task of monitoring prices? Even better, what if you could receive a guaranteed fixed price that would remain in place for up to a year?

Our latest Foreign Exchange Report will not only provide you the latest insight into the future of the world’s most popular currencies, but also how you could save by securing a fixed exchange rate for up to 12 months with Accendo FX and other ways to avoid currency risk. Read on to find out more!


How fixed prices work

When your daily life relies on exchanging currencies, not knowing what the day to day impact of your expenses can be stressful, to say the least. So why take the added risk of paying your business’ invoices or transferring money abroad at the going market rate, whether attractive or not, when instead you can enjoy the security of Forward Contracts.

Instead of a spot rate, in which you would pay the current market price for a currency transaction regardless of future movements, a forward contract guarantees that the price of the trade is held for a given period for a specific trade value. Dependent on the currency, this can last up to 12 months and, crucially, the price of the forward will not change during this period, irrespective of market movements!


How to secure your rate

Forward contracts can be agreed between your point of contact at Accendo FX and guaranteed with a deposit of up to 5% of the trade’s value. This deposit will then be attributed to the final settlement of the forward when funds are required. The only obligation of a forward contract is that the trade is settled by the agreed upon date, regardless of market movements. See below for an example of forwards!


An example of a forward contract

Perhaps the best possible example of how a forward contract may benefit you in recent memory is Brexit. The surprise result of the EU referendum saw Pound Sterling fall sharply against both the Euro and the US dollar. Should you have used a forward, you may have managed to escape increased costs!

For example, using a forward contract you would have been able to book the purchase of your specified value of Euros before the result of the referendum at around €1.30 per £1. Subsequently, despite the sharp devaluation of Sterling, you would have been access the forward booked trade at the agreed upon value over the predetermined time frame, potentially saving you thousands! Of course, should FX markets move in your favour during that period, you are still obligated to complete the forward contract.


For a look ahead at key upcoming events that could influence foreign exchange markets, and details of how you can avoid further currency risk on popular currency pairings, just turn over the page!

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This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.

Accendo Markets considers opinions and information contained within the research to be valid when published, and gives no warranty as to the investments referred to in this material. The income from the investments referred to may go down as well as up, and investors may realise losses on investments. The past performance of a particular investment is not necessarily a guide to its future performance. Prepared by Michael van Dulken, Head of Research

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