A Forward Exchange Contract is a contract between two parties whereby they commit themselves to exchange a specified amount of one currency for another at an agreed rate of exchange, settlement of which takes place on a fixed date in the future.

Importers and those with known commitments such as dividends, management fees, gratuities, interest and principal repayments etc, who wish to fix the kwacha value of USD, GBP, ZAR, EUR, etc.

• Protection against currency exposure, exchange rate movement, devaluation etc
• No cash flows except on maturity date
• Costing is effective and determined in advance
• In a country like ours, where foreign exchange availability follows seasonal patterns, this becomes a practical hedge.

• Clients apply for a Forward Exchange Contract facility
• NBM calculates and quotes the forward rate
• Transaction is agreed by telephone, email or fax
• Both parties sign a contract detailing the amount, rate and delivery date
• Exchange of currencies takes place on the contract maturity date
• In the event of cancellation or lack of sufficient funds on the part of the client, the contract shall still be exercised on the maturity date. Simultaneously, the bank shall buy back same amount of foreign currency as contracted at the prevailing spot buying rate.