Foreign exchange

ANZ China Markets team provides a range of foreign exchange products and services to global customers.

Our foreign exchange risk management strategy covers:

• Payment settlement foreign exchange risk under cross-border trade;
• Foreign exchange risk under foreign currency financing;
• Cross-border investment related foreign exchange risk.

Forward exchange contract

A Forward Exchange Contract is a contract between two parties (the Bank and the customer). One party to sell and the other party to buy one currency for another, at an agreed future date, at a rate of exchange which is fixed at the time the contract is entered into.

Benefits:

• Contracts can be arranged to either buy or sell a foreign currency against your domestic currency, or against another foreign currency;
• Available for all major currencies;
• Fulfill China regulatory requirements.

Once executed, a forward exchange contract is a committed obligation of the Bank and the customer. If more flexibility is required, please consider Foreign Currency Options.

Foreign currency options

Foreign Currency Options offer a fixed exchange rate on a future date if rates move adversely, but also provide the added flexibility of being able to use the prevailing spot rate if rates have moved favourably.

If customer buys a Foreign Currency Option, the customer gets the right to choose, on an agreed future date, whether the customer wants to exercise the option and transact at the option exchange rate or not. If the spot rate is more favourable than the option exchange rate, then the customer will choose to transact at the spot rate. However, if the spot rate is less favourable the customer may use the option.

For this right to choose, the customer will pay a premium at the outset (as the customer would for insurance). Options give the customer more flexibility in selecting the exchange rate. However, the more favourable the exchange rate the customer selects, the higher the premium cost will be.

Options can also be used to hedge uncertain exposures. The maximum cost will be the premium paid for the option. Options can be structured in many ways to assist the customer in the management of foreign exchange exposures.

The products chosen by the customer would be expected to reflect a combination of the customer’s attitude to risk, overall exposure management objectives and broad view on the future movements of the foreign exchange market.

This information is not intended to lead the customer to assess whether a particular product is suitable or not, as the customer should have their own financial opinion. For further explanation of the product features, please contact our sales team.