Let us help you hedge your exchange rate risk.

At Velocity Trade, our online Latitude GT platform transfers your money quickly and safely to any regular bank account anywhere in the world. We offer better rates than the bank and we charge no fees. We offer spots, forwards and orders to allow you to make a transaction now if the rate is good, or hedge your risk with forwards and orders to get the rate when the rate is good.

Spot Transactions

A spot transaction is when one currency is bought with another currency at a rate being offered now. You have up to two days to settle the transaction and pay the full amount at this rate. Once cleared funds are received, the transfer process is initiated and funds are immediately transferred.

Forward Contracts

Forward contracts help you hedge your risk against market volatility. A forward contract is when foreign currency is bought at a rate offered now, but to be transferred at a later date. Forward contracts reduce your exchange rate risk by allowing you to lock in an exchange rate that is offered now without having to pay for the purchased currency until a future date. This is a great way to give you certainty on your exchange requirements in the future. Forward contracts require a 5-10% deposit payable within two days, with the remainder payable at the time of transfer.

Many of our customers have to make international payments such as importing goods. Making payments in foreign currencies may mean that unfavorable exchange rate movements will increase their costs when converting to foreign funds. Click here to see an example of how forward contracts can help decrease costs.

Orders

Orders allow us to make your trade for you at an exchange rate you choose. You tell us the exchange rate you are hoping to attain and we'll watch the market for you 24 hours a day and execute the transaction when the market reaches your desired rate.

Transaction Size

The standard mimimum transaction size for Velocity Trade currency transfers is NZD $4,000 or equivalent in other currencies. In most cases Velocity Trade will accept transactions below this amount, please see here for more details on smaller transactions. 

We deal with the following currencies:

AUD

CAD

DKK

EUR

HKD

JPY

NZD

NOK

GBP

SGD

ZAR

SEK

CHF

USD

Ready to make a transfer? Learn how simple the process is to transfer your money with Velocity Trade. 

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If you would like to place an order for a certain exchange rate or book a forward contract, please call us and we will set this up for you!

Example of Forward Contracts

ABC Limited (ABC), a New Zealand shoe manufacturer, plans to import leather from Australia with payment of AUD$400,000 to be made in 3 months time.

The current spot rate is 0.7917

The current rate offered for a forward in 3 months time is 0.7941

If the NZD/AUD exchange rate was to fall between today and the AUD purchase date in 3 months time to 0.7717, the cost of AUD would increase to NZD$518,336, costing the company an extra NZD$13,094. By using forwards ABC can hedge its risk and 'lock in' a rate today to be used for the transfer in 3 months.

How it works:

ABC will decide how much of its total payment to cover and will then book a 3 month forward contract with Velocity Trade at the 3-month forward rate of 0.7941. When this deal is made, ABC submits a 10% deposit of the total amount of the forward contract.

Just before the 3 months passes, ABC Limited sends Velocity Trade the amount owed in NZD less the initial deposit, to which Velocity Trade then pays the AUD$400,000 to the Australian supplier's bank account. Velocity Trade charges no fees and there are no hidden costs.

Option 1: 100% forward

If ABC Limited were to put through a spot transaction at the current exchange rate of 0.7917 it would have to pay NZD$505,242.

100% spot: $400,000 @ 0.7917 = $505,242

To hedge its risk 100%, ABC should buy the full amount of AUD$400,000 at the 3 month forward rate of 0.7941. Now, ABC only has to pay NZD$503,715 which saves the company over $1,500.

100% 3 month forward: $400,000 @ 0.7941 = $503,715

Option 2: 90% forward

If ABC wants to reduce its risk but believes the spot rate will increase in 3 months time, it can cover 90% of its payment with a 3 month forward for AUD$360,000 and leave 10% to buy AUD$40,000 at the spot rate in 3 months time.

If the spot rate increases in 3 months time, it is assumed to increase to 0.8117:

10% spot: $40,000 @ 0.8117 =                      $49,279
90% 3 month forward: $360,000 @ 0.7941 = $453,343

                                                                        $502,622

If the spot rate decreases in 3 months time, it is assumed to decrease to 0.7717:

10% spot: $40,000 @ 0.7717 =                      $51,834
90% 3 month forward: $360,000 @ 0.7941 = $453,343

                                                                        $505,177

Option 3: 75% forward

If ABC wants to cover less of its payment and take a little more risk, it could cover 75% of its payment forward 3 months and buy 25% at the spot rate in 3 months time.

If the spot rate increases in 3 months time, it is assumed to increase to 0.8117:

25% spot: $100,000 @ 0.8117 =                    $123,198
75% 3 month forward: $300,000 @ 0.7941 = $377,786

                                                                        $500,984

If the spot rate decreases in 3 months time, it is assumed to decrease to 0.7717:

25% spot: $100,000 @ 0.7717 =                    $129,584
75% 3 month forward: $300,000 @ 0.7941 = $377,786

                                                                        $507,370

As shown by options 2 and 3, by using forward contracts to cover only part of the full payment, ABC Limited has more risk exposure, but also has a greater chance to benefit from rising exchange rates. ABC should enter into a 100% forward contract if it believes the exchange rates will decrease in 3 months and/or does not want to be exposed to any risk.

Forward contracts are a great way to prevent risk by protecting yourself against adverse exchange rate movements in the future, as well as a great way to take advantage of a great future rate offered now. By using Velocity Trade to make global currency transfers you save money by avoiding the large transfer fees typically charged by banks and get access to our great exchange rates!

Forward contracts:

An initial deposit of 10% is required on the amount of the forward contract. This margin amount may need topping up if the market rate has decreased between the deal date and the valuation date. If further payment is required, Velocity Trade will bring this to your attention, and please ensure any further payments are made immediately to avoid any deals being closed out.