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What is a forward contract?

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Written by Turi Henderson

A Forward contract is a type of financial hedging that helps businesses lock in a specific exchange rate up to five years in advance.

This tool helps protect your commercial margins from sudden foreign exchange risk, giving you absolute cost certainty. While locking in a rate means you cannot take advantage of subsequent movements if the market moves in your favour, the security of knowing your maximum costs often outweighs market uncertainty.

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