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About managing currency risk

What it means

Currency risk arises because the value of the Australian dollar fluctuates due to supply and demand. Any business that purchases stock or equipment overseas or exports its products abroad is affected.  The benefits of managing that risk are two-fold:

  • Primary goal is to protect your business from the negative impact of exchange rate fluctuations
  • Because exchange rate volatility also provides opportunity for gains, a secondary goal is to strike a balance between potential risk and return


Forward foreign exchange

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

Currency options
These provide 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.

Related products

Managing interest rate risk

CommBank offers a range of flexible tools to help manage your interest rate risk and cash flows relating to your borrowing facilities.

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Managing commodity risk

Commodity risk management offers your business protection from the negative impact of fluctuating prices.

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Important information

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 the Product Disclosure Statement (PDS) for Flexible Forward (PDF 127kb) and consider it before making any decision about this product.