Managing currency risk

Currency risk arises because the value of the Australian dollar fluctuates due to supply and demand. Any business that purchases stock or equipment overseas is affected.  Currency risk management will help protect your business from the negative impact of currency fluctuations while allowing you to benefit from any favourable exchange rate movements.

The primary goal of currency risk management is to protect your business from the negative impact of exchange rate fluctuations, at the lowest possible cost. Because exchange rate volatility also provides opportunity for gains, a secondary goal is to strike a balance between risk and return.

Solutions for managing currency risk

Our comprehensive range of currency risk management solutions include the following:

Forward foreign exchange

Forward foreign exchange is a risk management tool that can help protect your business from adverse exchange rate movements. You ‘lock in’ an exchange rate now for a specific time in the future, which enables you to plan for and budget your business expenses with more certainty.

Flexible forwards
Flexible forwards provide protection against adverse exchange rate movements while giving you the opportunity to benefit from favourable exchange rate movements.

Currency options
A currency option provides the buyer of the option with the right (but not the obligation) to buy or sell one currency amount at a specified exchange rate on a specified date.

• Important information about advice
  As this advice has been prepared without considering your objectives, financial situation or needs, you should, before acting on the advice, consider its appropriateness to your circumstances.
  All products mentioned on this web page are issued by the Commonwealth Bank of Australia, view our Financial Services Guide (PDF 59kb). View Product Disclosure Statements (PDSs) for  Foreign Exchange (PDF 128kb), Flexible Forward (PDF 127kb), Flexible Forward Bonus (PDF 133kb), Flexible Forward Convertible (PDF 136kb),  Flexible Forward Participating (162kb), Flexible Forward Double No touch (157kb),  Flexible Forward Convertible Knock Out (PDF 151kb) and  Flexible Forward Protector (PDF 128kb) consider them before making any decision about these products.
  
  If you have a complaint, the Bank’s dispute resolution process can be accessed on 13 2221.