Par Forward (FX)

Par Forward is yet another hedging instrument that allows corporates to hedge their FX exposures more effectively.

• Businesses can contract buy or sell foreign exchange at an agreed-upon rate/price determined today for delivery/settlement on an agreed future date
• A series of FX forwards where the forward rates have been blended into a single FX rate
• A company may have a series of receipts in a foreign currency and wishes to convert them back into either their domestic currency or another currency of their choice
• Cashflows being hedged can be at irregular intervals or of irregular notionals
• Simple and straight forward hedging
• A defensive and conservative strategy for hedger who wish to ‘lock-in’ their cash flow requirements

• To apply, all corporations have to set up a FX Line with the Bank. The FX line states the maximum amount and tenure that you may contract at any one time.

• If your business currently has credit facilities (e.g. Letter of Credit, Trust Receipts or Overdraft line) with the Bank, you can arrange with your banker to restructure the credit line to accommodate the additional FX facility by earmarking a portion of the existing facilities.