Currency Exchange Management

Contact the International Trade Solutions on
1300 656 251

Westpac provides a number of mechanisms to handle foreign currency transactions and to assist in management of foreign exchange risk exposures. These include:

Foreign Currency Accounts

Accounts in most major currencies are available onshore (in Australia) or overseas. These accounts may be opened for business related purposes and can be used as a natural hedge against exchange rate fluctuations, in support of your international trade transactions. Overdraft facilities from onshore accounts are available by prior arrangement.

Forward Exchange Contracts

Trading in foreign currencies may offer some attractive features such as access to lower interest rates but it also creates an exchange risk exposure. Where no natural hedge such as foreign currency receivables exist, Forward Exchange Contracts can be written to protect against any adverse movement in the exchange rate during the period of risk exposure. These contracts can be written in most of the major currencies for a period from 3 business days to 12 months hence. The contract imposes an obligation on both parties and, since the exchange rate is determined at the time the contract is written, any subsequent fluctuation of the exchange rate will not effect the agreed contract rate.

Foreign Currency Option Contracts

For foreign currency dealings in excess of $25,000, Foreign Currency Option Contracts may be written. A Foreign Currency Option Contract gives the buyer the right, but not the obligation, to buy, or sell, a specified amount of one currency, at a specified rate, for delivery on or before the expiration date of the Contract. Option Contracts can be used to hedge any type of exposure. The major difference from Forward Exchange Contracts is that the holder has no obligation to take up (exercise) the option if the exchange rate subsequently moves in their favour.

Smart Forward Contract

A Smart Forward Contract (SFC) enables both importers and exporters to protect themselves against adverse movements in exchange rates, while providing some potential for them to benefit from favourable movements in exchange rates. A SFC combines the exchange rate protection of a Forward Exchange Contract (FEC) with the flexibility of an option contract.

Unlike an FEC, the SFC allows you to benefit from any favourable movements within a predetermined range. An SFC is characterised by a contract rate, a trigger level and a maturity date. The contract rate is the guaranteed rate at which funds will be exchanged at maturity if:

The contract rate at maturity is more favourable than the market rate
The exchange rate reaches the trigger level during the life of the contract

If, however, at maturity, the market rate is more favourable than the contract rate, and the market rate has not reached the trigger level during the life of the contract, you are free to transact in the spot market at the prevailing spot rate.

FOREX Rates

Visit the Foreign Exchange Centre to access the latest rates or use the Currency Converters.

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