Standard FX Forward
The ideal forward contract for businesses that know the exact date of a future payment.
The Most Cost-Effective Hedging Solution – Standard FX Forward (SF)
If you know exactly when a future international payment or receipt will take place, a Standard FX Forward is the most cost-effective hedging solution. It allows you to lock in an exchange rate in advance and typically secure a more favourable rate than with more flexible hedging products. You know the exact settlement date of your transaction, and we can offer the most competitive pricing available across our range of forward contracts through a Standard FX Forward (SF).
We’ll call you and recommend the most suitable FX hedging solution for your business based on your cash flow profile, ensuring the strategy is tailored to your specific needs and requirements.
Comparison of Standard and Amortising FX Hedging
| Standard FX Forward (SF) | Amortising FX Forward (AF) | |
|---|---|---|
| Trade Date | 1 July | 1 July |
| Hedged Amount | EUR 100,000 | EUR 100,000 |
| Forward Rate | 25,00 EURCZK | 25,00 EURCZK |
| Settlement | 30 September | Any time between 1 July and 30 September |
When to Consider an SF
You know the exact date when invoices will be paid or received
Payments and receipts occur regularly, but you can specify the exact settlement date for each currency conversion
You want the most competitive exchange rate available across all forward products
You need to protect both your profit margin and cash flow
You prefer a dedicated forward contract for each transaction or invoice, with the best available pricing
A Standard FX Forward is ideal for businesses that can precisely define settlement dates and want to secure the most competitive forward rate available.
Citfin Tip: A one-to-one hedging strategy offers both advantages and considerations. If you choose to hedge individual transactions using a series of Standard FX Forwards (SFs), it is important to ensure that settlement dates and amounts are forecast as accurately as possible. The key benefit of this approach is access to a more favourable forward rate compared with more flexible hedging solutions.
How an SF Works in Practice:
| Order Secured | 1 July |
| SF Agreed | 1 July |
| Forward Rate | 25,00 EURCZK |
| Hedged Amount | EUR 100,000 |
| Settlement Date | 30 September |
| Settlement | EUR 100,000 at 25.00 EURCZK |
1) Order Secured – On 1 July, your company wins a contract with a German business partner. You know that the customer has a reliable payment record and that the euro proceeds are expected to arrive at the end of September. However, future exchange rates remain uncertain. At the current exchange rate, the transaction delivers the profit margin you require. A Standard FX Forward (SF) eliminates this currency risk by allowing you to lock in the exchange rate in advance and protect the profitability of the contract.
2) FX Forward Agreed – You enter into a Standard FX Forward (SF) with Citfin and lock in an exchange rate for a future currency conversion. From that moment on, you know exactly the rate at which your euros will be exchanged, regardless of how the market develops in the meantime. This gives you certainty over the future value of the transaction and protects your planned profit margin from adverse exchange rate movements.
3) Settlement – The full euro amount is received from Germany at the end of September, exactly as expected. Even if the funds arrive slightly earlier, you can wait until 30 September to complete the exchange and benefit from the forward rate you secured in advance. This ensures that the transaction is settled at the agreed rate and that your planned margin remains fully protected.
4) Roll-Over – If payment dates are delayed and part or all of the euro amount cannot be settled on 30 September as originally planned, there is no need to worry. We can arrange an FX Swap to roll the entire transaction forward to a new settlement date, ensuring your exchange rate protection remains in place while keeping the hedge aligned with your actual cash flow.
A Standard FX Forward (SF) is ideal for businesses that can accurately plan the timing of their payments and, thanks to reliable trading partners or strong cash flow, are able to wait until the forward contract’s maturity date before converting their funds.
Benefits of a Standard FX Forward for Exporters and Importers
One hedge, one transaction, one exchange rate
The more accurately you define the settlement date, the better the forward rate
If payments are delayed, an FX Swap can help keep your hedge in place
Accurate cash flow planning and protection of profit margins
Exchange rate volatility no longer disrupts your business
You know today the rate at which you will exchange currency in the future
New to FX Hedging? Here’s What You Need to Know
Arranging FX hedging is simpler than you might think. Many businesses assume that managing currency risk involves a complex process, extensive paperwork, or sophisticated financial products. In reality, the goal is exactly the opposite — to provide greater certainty, stability, and control over future foreign currency payments and receipts.
Master Agreement. A master agreement is required before entering into forward contracts and other FX hedging transactions. Citfin will guide you through the entire process and help ensure everything is set up correctly.
LEI Code. European regulations require companies entering into FX hedging transactions to have a Legal Entity Identifier (LEI). If your company does not yet have one, Citfin can assist you with the application process.
Your Dedicated Dealer. Your dealer works with you on real business challenges — discussing exchange rate developments, hedge utilisation, potential roll-overs, and the most appropriate hedging structure for your company. It is not just about executing transactions; it is about the ongoing management of your company’s currency risk.
Every Business Is Different. A Standard FX Forward (SF) may not always be the right solution. You may require a different hedging product, an FX Option, or a more advanced option strategy. Every business has unique requirements. Some companies need a fixed settlement date, while others prioritise maximum flexibility. Since 1996, we have helped businesses implement hedging strategies that reflect their actual payment flows, cash flow needs, and business models.
Important Risk Information. The main risks associated with FX hedging arise from future market developments and the obligation to settle the transaction on the agreed date. Before entering into a Standard FX Forward, we will explain how the product works, its key features, and the risks you should consider.
Not sure which type of forward contract is right for your business?
Leave us your contact details or speak directly with one of our specialists.
During a short consultation, we will assess whether a Standard FX Forward,
an Amortising FX Forward (AF), or another FX hedging solution is the most
suitable option for your business.
Tel.: 234 092 020
email: jiri.rys@citfin.cz
FAQ – Frequently Asked Questions
What Is a Standard FX Forward?
A Standard FX Forward is a foreign exchange hedging solution that allows a business to lock in today’s exchange rate for a future currency conversion on a specific settlement date. This provides certainty over the future exchange rate, regardless of market movements.
It is ideal for exporters and importers who know the exact date of a future payment or foreign currency receipt. It is most commonly used by businesses with fixed invoice due dates or contractual payment schedules.
A Standard FX Forward is designed for a single settlement on a specific date. An Amortising FX Forward (AF) allows the hedged amount to be drawn down gradually over a defined period, providing greater flexibility when managing foreign currency payments and receipts.
A forward contract protects a business against adverse exchange rate movements, helps stabilise profit margins, improves cash flow planning, and enables more accurate forecasting of future costs and revenues related to international trade.
Yes. A Standard FX Forward can be arranged for most actively traded currencies. Businesses commonly hedge currency pairs such as EURCZK, USDCZK, GBPCZK, PLNCZK, and HUFCZK, as well as many other currency combinations.
A forward contract is designed to eliminate currency risk rather than to speculate on future market movements. By locking in an exchange rate in advance, your business gains certainty and can plan with confidence, helping protect the profitability of international transactions.
If your business regularly trades internationally, receives or makes payments in foreign currencies, and values stable profit margins, FX hedging may be an appropriate solution. The most suitable hedging strategy should always be determined based on your company’s specific requirements, payment flows, and risk profile.
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