Our Guide to the Different Currency Contracts

When transferring money to buy a property in France or abroad, many people find foreign currency exchange costly, confusing and tiresome. Using your own bank may seem like a good idea, but it is rarely the best option. In fact, high street banks have been known to hold things up and even flounder in certain money market situations.

To avoid such issues, the safest and most straightforward option is to use a service offered by my-french-hous.com through its financial partners and experts. The service is fast, foolproof, and available online, with the added benefit of letting you speak to your advisor personally whenever you need to.

With a dedicated account manager handling your specific requirements, you won’t have to deal with the frustrations of automated call answering as you might with other financial institutions or even with your own bank.

What’s more, the service is free of any fees or commissions and is designed to be completely stress-free, saving you both time and money. Learn about the two different types of contracts and options available for your currency requirements.

Four Types of Currency Contracts

The Spot Contract

This is the most basic and popular foreign exchange product. It is an agreement to buy or sell one currency in exchange for another. You have 2 days to settle the contract, at a price based on the prevailing “spot exchange rate”, the current value of one currency compared to another.

Although the spot market lets you buy or sell foreign currency as you need it, spot exchange rate movements are highly unpredictable, even during a single trading day. Upon receipt of cleared funds, currency is available for onward transmission.

The Forward Contract

A Forward Contract lets you buy or sell one currency against another, with settlement no later than the day the contract expires. Unlike spot contracts, a forward contract eliminates the risk of exchange-rate fluctuations by locking in a price today for a transaction that will take place in the future (up to 2 years). You also have the flexibility to take delivery of your currency in an agreed time period before the expiry date.

A 10% deposit is required to secure the pre-contract and must be paid within two working days, with settlement due on the day the contract expires.

The Limit Order

A Limit Order is an order to secure currency at a specific price that may not be available at that time. This type of contract is particularly useful when markets are moving in your favour. This is one of the two most common types of orders, the other being a stop-loss order.

The Stop Loss Order

Finally, a Stop Loss order is used when the market is moving in the opposite direction of your currency. An order is placed on file with your broker to help ease the stress of adverse market movements.

A stop-loss order instructs your broker to buy when the currency reaches a specified price. The purpose of a stop loss is simple: you want to prevent any further movement before the currency falls.

Save Money on Currency Exchange

Find out how much money you can save with our foreign currency exchange service for your property or your business in France or elsewhere overseas. And remember that home and contents insurance is mandatory on the completion date.