Currency trades
Currency trades
The foreign exchange market is a part of the financial market. It facilitates the exchange of various foreign currencies, including payments for imports, receipts for exports, and other operations that affect the exchange rate of the domestic currency in relation to foreign currencies.
The foreign exchange market can be either a spot market (immediate transactions such as currency conversions and arbitrage) or a forward market (transactions such as swaps, forwards, futures, and options). The foreign exchange market also serves the function of hedging against foreign exchange risks.
Currency Spot Conversions
A spot currency conversion is the purchase or sale of a specific amount of one currency for another at an exchange rate derived from the current price on the foreign exchange market at that moment. It is used for converting funds for international payments, receiving foreign payments, or transferring funds between accounts held in different currencies.
Settlement of operations occurs on a spot date, i.e., two business days after the transaction is concluded. Clients can request settlement on the same day as the conversion agreement (D+0) or the next business day (D+1), with the final exchange rate adjusted by the relevant interest rate differential.
Conditions
- Signed Master Treasury Agreements
Contact
Corporate Sales
02/5055 9650, 02/5055 9630, 02/5055 9620, 02/5055 9610, 02/5055 9595, 02/5055 9520
Currency Forwards
A forward transaction is a commitment to exchange two currencies with a maturity date longer than the spot date, i.e., at least D+3, with the future exchange rate determined on the day the commitment is made. It involves locking in the exchange rate for future currency conversions to eliminate exchange rate risk when managing cash flow in different currencies.
The forward rate is derived from the spot rate, adjusted by forward points, which represent the interest rate differential for the period until the forward's maturity. No exchange of funds occurs on the commitment date; it is executed on the maturity date.
Forwards are non-standardized products, meaning volumes and maturities are set individually based on client requirements.
Utilization
- Hedging exchange rates for cash flows in foreign currencies against fluctuations in foreign exchange markets
- Setting the price of a commodity in advance
Conditions
- Signed Master Treasury Agreements and Product Cards
Contact
Corporate Sales
02/5055 9650, 02/5055 9630, 02/5055 9620, 02/5055 9610, 02/5055 9595, 02/5055 9520
Currency Swaps
Currency swaps combine spot and forward currency operations. They involve the sale/purchase of one currency for another, with a simultaneous repurchase/resale after a certain period at a pre-agreed rate, keeping the transaction volume unchanged.
Types of Swap Transactions
- Buy and Sell (immediate purchase of the base currency + forward sale of the base currency)
- Sell and Buy (immediate sale of the base currency + forward purchase of the base currency)
Conditions
- Signed Master Treasury Agreements and Product Cards
Contact
Corporate Sales
02/5055 9650, 02/5055 9630, 02/5055 9620, 02/5055 9610, 02/5055 9595, 02/5055 9520
Currency Options
Currency options represent the right, but not the obligation, to sell/buy the underlying asset (i.e., foreign currencies) on a predetermined date at a pre-agreed rate. The price of this right is the option premium, which depends on the agreed strike price, the time period, the volatility of exchange rates, and the interest rates of the respective currencies.
Types of Currency Options
- Call Option – the right, but not the obligation, to buy the base currency at a specified rate
- Put Option – the right, but not the obligation, to sell the base currency at a specified rate
By Exercise Possibility
- European Type Option – exercisable only on the agreed expiration date
- American Type Option – exercisable at any time up to expiration
The advantage of options is their flexibility and 100% hedging at the desired level with the potential for further utilization of exchange rate changes. The minimum contract volume is EUR 100,000 or equivalent in another currency.
Conditions
- Signed Master Treasury Agreements, Product Cards, and Trade Termsheets
Contact
Corporate Sales
02/5055 9650, 02/5055 9630, 02/5055 9620, 02/5055 9610, 02/5055 9595, 02/5055 9520
Structured Products
Structured products allow hedging against exchange rate risk through a combination of standard products such as forwards, options, etc. These products are tailored precisely to the client's needs.
Conditions
- Signed Master Treasury Agreements, Product Cards, and Trade Termsheets
Contact
Corporate Sales
02/5055 9650, 02/5055 9630, 02/5055 9620, 02/5055 9610, 02/5055 9595, 02/5055 9520
