Forward contracts allow you to fix an exchange rate up to a year ahead of needing to make a currency transfer and are one of the specialist transfer options offered by leading currency providers. Using a forward contract to secure the current exchange rate for a future transfer will ensure you know exactly how much you will receive from your property sale. It will also protect your funds from adverse movements in the currency market during the sale process.
If the buyer pulls out or if there are unforeseen delays you have the option of prolonging the date of completion on a forward contract. When booking a forward contract, your currency provider will ask for a 10% deposit and you will only need to add to it if the market moves 5% higher than the rate you have booked over the duration of the contract. This is known as a margin call.
There are some risks to rolling forward the date of completion on a contract because (in the worst-case scenario that the sale falls through completely) you may not find a new buyer for a long time.
However, there are no penalties if you fail to complete on the contract. If reversing it incurs a loss to the currency firm due to movement in the exchange rate [because it will have bought the currency and kept it aside for you], they will often deduct that loss from your deposit and return the balance. If there is a profit due to market movements it will return your full deposit along with any profit.
It might sound a little complicated but if you register with a leading currency provider, their transfer specialists will be able to talk you through the process and make it all very simple.
Question answered by Pippa Maile of Currencies Direct. For more information on international money transfers with Currencies Direct see www.currenciesdirect.com/france or call +33 (0)4 22 32 62 40
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