Cross-border enterprises and e-commerce businesses can reduce and better manage foreign exchange risks via utilising professional forward foreign exchange services offered by KVB, which allow them to lock in the forward exchange rate before they pay their global suppliers.
* Customers who wish to deal FX Forward transaction with KVB must provide international trade related purchase orders and trade invoices on the booking date. This service will be provided by KVB Trading (Hong Kong) Limited.
A foreign exchange (FX) forward contract is a contractual agreement between a corporate client and KVB, where we agree to buy or sell a currency at a predetermined exchange rate on a specified future date, unaffected by the prevailing market rates on that day. Forward transactions can help clients hedge against future foreign exchange risks.
Our major client, an international wine agent in China, is the exclusive distributor of a renowned vineyard. Every quarter, they need to purchase a 20-foot container of high-end French wines, with a total value of 1 million pounds. They need to convert their company's holdings of US dollars into pounds through the international exchange process to pay to the vineyard one month later.
At that time, the wine agent signed a one-month foreign exchange forward contract with KVB and deposited a small amount as a down payment to lock in the forward exchange rate.
Results of Collaboration
On July 1st, the client utilized KVB's FX Forward Contract and locked in a rate of 1.2087 pounds to US dollars for one month later. On the payment date, July 31st, even though the exchange rate had increased to 1.2152, the client was still able to settle based on the agreed forward rate. If the client had not entered into a FX forward contract, they would had to pay an additional $6,476 to buy one million pounds.
We were struggling to find a reliable partner who can do cross-border payments that was predictable in timing, and offered good conditions for us in terms of exchange rates and service fees. We were very lucky to find you guys.
Director of United Sourcing Services Limited
KVB helps businesses from all walks of life, from business payout to overseas property investment. We provide competitive FX rates for our business clients in order to help their global settlement business.