How do I protect myself against currency fluctuations?
The most effective way to manage the risk of currency instability is by purchasing foreign currency Cambridge Forward Contracts. They enable you to lock into a specific exchange rate. You can use your Cambridge Forward Contract to make your payment on a specific date, or to make several payments over a series of dates in the future.
What is a Cambridge Forward Contract?
Forward transactions involve a delivery date further into the future, possibly as far as a year ahead. Our foreign exchange Account Managers agree to buy and sell currencies for settlement at least three days later at predetermined "locked-in" exchange rates. This type of transaction is often used by businesses to reduce their exchange rate risk.
What do companies use Forward Contracts for?
By buying or selling (Cambridge Forward Contracts) in the forward market, one can protect the present value of a particular currency from exchange rate volatility. You lock-in today's exchange rate instead of a volatile currency exchange rate in the future that could significantly devalue your purchasing power.
Why are rates charged by currency trading companies different than those published in the newspapers?
The currency exchange rates published in the newspapers come from international wire services which are based on the dealing price. With currencies being traded around the clock, those published rates will always be behind the actual dealing price.
What is a Spot transaction?
An agreement to buy or sell currency at the current exchange rate is known as a Spot transaction. Generally, Spot transactions are undertaken for an actual exchange of currencies and delivered or settled within two business days.
Are Forward prices the same as Spot prices?
Generally speaking, no. Theoretically, it is possible for the forward price of a currency to equal its spot rate; however, interest rates must be considered. The interest rate that can be earned by holding different currencies usually varies, therefore forward prices can be higher or lower than (at a premium or discount to) the spot rates.
What is the difference between a forward contract and a futures contract?
A currency exchange forward contract guarantees an exchange rate for transactions being completed at a future date or series of dates. Futures contracts are an investment option for a commodity such as heating oil.
Can a forward contract be terminated early?
Yes it can. But since there are fees associated with the transaction, it will involve extra fees.
Are there any hidden charges or fees for forward contracts or swaps?
No. Your costs are all spelled out in advance, so you quickly know exactly what you are expected to pay when you enter into the agreement.
What is the difference between a wire and a draft?
A wire is an instant electronic transfer of funds. A draft is the issuing of an international check.
How can I set up an account?
You can call any of our offices and ask to speak with a Cambridge Account Manager. It's that easy. Your Account Manager can set you up with either a General Account and/or a Cambridge Online account.
Will my Account Manager assist me with any foreign currency transactions I make through Cambridge Online?
Using Cambridge Online doesn't mean that you get less service. Our Account Managers will be there for you every step of the way.
If I'm presently a Cambridge client, what are the advantages of going online?
You will also have the added benefit of being able to access your account 24/7. Plus the ability to:
· In 3 easy steps you can get a live quote and book a deal, send payment to your beneficiary and settle the funds
· Receive and send immediate email confirmation of payment to your team and beneficiary
· Search and review all order history at your convenience
· Manage the complete setup of each user through My Profile & Tools