Foreign Exchange

Businesses that trade internationally are likely to be exposed to foreign exchange risk arising from volatility in the currency markets. If not managed effectively, the impact that exchange rate fluctuations can have on business profitability can be significant.

Our team of foreign exchange specialists will work with you to develop an appropriate foreign exchange risk management strategy that effectively meets the requirements of your business, using instruments such as spot cover, forward exchange contracts (FECs) and derivative instruments.

We provide the following key services: 

• Spot cover – foreign exchange transactions in which one currency is bought or sold against payment in another currency at a specified rate with settlement taking place two business days later. The two-day settlement process, commonly referred to as spot, is international practice due to differences in time zones and the time required by banks to ensure that settlement is done correctly.
• Same-day and next-day value deals –when urgent currency payments or receipts must be processed, one-day value or even same-day value exchange rates may be provided, depending on currency cutoff times.

FECs are contractual agreements between the bank and its clients to exchange a specified amount of one foreign currency for another at a predetermined exchange rate on a specified future date. These contracts are used to hedge exposures to exchange rate fluctuations by 'locking in' future foreign exchange rates. There are various types of FECs that can be used depending on your client requirements:

• A fixed FEC can be used for settlement only on the specified maturity date.
• A partly optional FEC can be used within a pre-specified period between two future dates.

Swaps are the simultaneous purchase and sale of identical amounts of one foreign currency for another, but on two different value dates, either spot against a forward date or one forward date against another forward date.

• Early delivery (or pre-take-up) swaps are used to bring forward the maturity date of an existing FEC.
• Extension (or rollover) swaps are used to extend the maturity date of an existing FEC to a later date.

Long-dated forwards

Long-dated forwards are FECs with a maturity date longer of than 12 months forward, subject to prior approval of the Central Bank of Swaziland.

Currency orders, stop-loss orders and call-levels

We provide 24-hour monitoring and execution of currency orders, stop-loss orders or call levels on behalf of clients.

Financial markets information and advice

We provide pertinent data and astute perspectives on the foreign exchange markets to our clients.