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FX International Payments
Take a look at the world of foreign exchange and the key tools you can use to make effective and efficient international payments.
Foreign exchange is a growing and increasingly important aspect of international business relationships. This means it's important for every business owner to understand how currency markets work and the tools they can use to make effective transactions.
Watch this short video for a closer look at the history of foreign exchange and how you can get ahead.
In 1971, most international currencies stopped being linked to the price of gold. And since then, with the heavy involvement of central banks and cross border businesses, the market has positively boomed.
It's a growing, liquid and very quickly moving market, and for a lot of businesses, it's an essential one. But with sheer enormity comes a very high degree of volatility.
You see, in a market that never sleeps, pricing never stops. Every second of every day, Monday to Friday, there's a live quote for every actively traded currency in the world.
This makes the ability of businesses to lock in a fixed rate for future payments and receipts a very valuable commodity.
Knowing what crucial cash flows will be in the future allows businesses to manage their money and make forecasts with more certainty.
Out of necessity, special tools have been developed for exactly this purpose.
These tools, available through foreign exchange providers, are spot contracts, forward contracts and futures contracts.
Spot contracts are the most basic method of exchange and are used to trade currency at whatever the exchange rate is at any given second on the day the trade is made.
Like buying a cow at auction, you pay the market price and take it away.
Forward contracts involve two parties agreeing on an amount and exchange rate for settlement at a future date. These are best locked in with foreign exchange providers, who can ensure swift and seamless transfers on settlement date.
Futures contracts have the same function as forwards, except they're traded on exchanges and are usually used to speculate rather than hedge transactions. It's like making a bet with someone, with a third party in the middle who holds the cash.
So those are the products, and they're offered by a wide range of exchange providers in a very crowded marketplace. But as a business, you want to ensure you're getting the best. The best deal execution, the best service, and the best market information available.
And this all boils down to two things, information and relationships.
Because in such a big, volatile market, where even a small difference in price could carve a significant slice out of your margins, working with the best information and the robust tools of a trusted and transparent provider is the best way rest easy.
The information contained in this document has been prepared for general information and educational purposes only without taking into account your objectives, financial situation or needs and is not designed to substitute for, or replace, a professional opinion about any particular business or situation or judgment about risks or appropriateness of any financial or business strategy or approach for any specific business or situation. This document is not a substitute for professional advice.
You should read the Terms and Conditions and consider the appropriateness of International Payments in relation to your individual requirements. For further information, please refer to the relevant Terms and Conditions
Important Note: Articles, comments and any other materials available on or through the FX International Payments website represent the views of their author and do not reflect the opinions or analysis of the American Express Company or any of its affiliates, subsidiaries or divisions. American Express makes no representation as to and is not responsible for, and does not validate, any information, opinions, assertions or statements expressed in any such materials, or the identity or credentials of the individuals communicating through the site. Information available on the site does not, and should not be relied upon to, replace the advice of your own professional legal, tax and financial advisors.
FX International Payments are arranged through American Express International Inc., (UEN S68FC1878J) Incorporated with Limited Liability in the State of Delaware, U.S.A. with a place of business at 1 Marina Boulevard, #22-00, One Marina Boulevard, Singapore 018989.
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