Currency order (FX order) is your order to the bank to exchange currency, without any additional confirmation, in case the market exchange rate of the required currencies corresponds with the foreign exchange rate agreed and specified in the order during the validity period of the order.
If the market price of the currency differs from the agreed price and the bank has not exchanged the currency under the terms set in the order, you can cancel the order. Before concluding this transaction, additional documentation with the bank must be signed.
Basic terms of transaction
- The order is valid for a period agreed between you and the bank, and the terms and conditions of the order may be fulfilled at any time
- Minimum amount for an order is EUR 100,000
- A transaction can be cancelled before the instruction has been carried out
- Currency forward outright and currency swap transactions can be concluded under the completed order
- No additional fees are applied to non-cash transactions
Example
Today, the company has received a total of USD 100,000 for the goods sold. Currently, the market rate of this currency amounts to USD 1.30 for one euro. This price is unfavourable to the company; therefore, it places a one-week stop loss / take profit order, i.e. the company instructs the bank to exchange the money when the US dollar exchange rate equals 1.25. Three days later, the US dollar exchange rate reaches the level desired by the company. The bank carries out the transaction – exchanges the money at the rate of 1.25 and notifies the company thereof. In case the US dollar exchange rate fails to reach the exchange rate preferred by the company within a week, the transaction would become null and void without any further notice.
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Please note that the data, examples and information on derivative financial instruments provided herein is for informational purposes only. This information has been prepared without consideration or regard of your knowledge or experience related to specific financial instruments and without having any information about your investment objectives or financial capacity to assume risks related to the conclusion of the transaction that meets your investment objectives; therefore, it cannot be construed as a personal investment recommendation, advice on trading in derivative financial instruments or investment research, order or invitation to buy or sell specific financial instruments and may not constitute any basis or part of any subsequent transaction.
