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How a foreign exchange facility guarantee can assist exporters

How a foreign exchange facility guarantee can assist exporters article image

For exporters, adverse movements in exchange rates are an inherent risk of doing business in international markets. 

For example, if you receive payment for your exports in US dollars but pay your expenses in Australian dollars, unfavorable shifts in the exchange rate of the currencies may affect your profit margin. 

A foreign exchange facility can help you protect your export profits from exchange rate fluctuations by locking in exchange rates and allowing you to hedge your currency exposure. The more of your export contracts you can hedge, the greater your control over foreign exchange risk. 

With a foreign exchange facility guarantee from EFIC, OzForex can increase the trading limit on your foreign exchange facility. This means you can extend your hedging program to include more of your export contracts and better protect your export profits.  

How does it work? 

Firstly, you must establish an OzForex foreign exchange facility. You can then request from OzForex an EFIC foreign exchange facility guarantee to increase the trading limit on your facility. 

If EFIC approves the application, it provides a foreign exchange facility guarantee to OzForex. 

OzForex then increases your trading limit, enabling you to hedge more of your export contracts.  

Terms and conditions 

To be eligible for the foreign exchange facility guarantee you should be an Australian exporter who has exported goods or services to at least the value of the foreign exchange facility guarantee in the past 12 months. 

For OzForex customers who have provided certain financial information to OzForex, the guarantee can facilitate an additional trading limit of up to $5 million. 

The term of the foreign exchange facility guarantee may be up to 12 months. 

You pay no additional fees or charges to obtain a foreign exchange facility guarantee. 

In most cases, EFIC does not require security for the guarantee, which can help to free up your working capital. 

And no additional fee is payable by you for the guarantee. 

“OzForex have a proven record of being able to make a meaningful difference to companies transacting internationally, says Jan Borgelt, OzForex’s International Payments Specialist. 

“If Forward Exchange Contracts (FEC’s) are being used as part of a hedging strategy, a foreign exchange facility with OzForex could help to protect export profits from exchange rate fluctuations by locking in the exchange rates”, he says. “This provides certainty.” 

Borgelt says with a foreign exchange guarantee from EFIC, OzForex can double the unsecured trading limit of that foreign exchange facility offered. 

This allows the exporter to hedge more of their foreign exchange exposure whilst also minimising chances of any advance payments and/or the need for margin calls. 

Exporters should take note that this service is only available to OzForex customers who have, or have approval for, a foreign exchange facility.

To register simply go to http://www.ozforex.com.au/efic or for more information contact OzForex on 1300 300 524 or jan.borgelt@ozforex.comJan

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