There are number of tools and techniques available to currency buyers that can help avoid the risks imposed by the rapidly moving currency market. Most currency brokers will be able to offer you these risk avoidance tools. It is all very well negotiating a good price for your overseas property but so many people throw away their savings by not considering the implications of exchange rate fluctuations. No one can control the currency markets or predict in which direction they are going to move. Wildly moving exchange rates can have a detrimental effect on your budget or anticipated profits and any shrewd investor should consider the currency market tools explained below.

Spot Contract

A Spot Contract allows you to buy currency at the prevailing exchange rate and pay for it straight away. Spot contracts are generally used when foreign currency is required immediately, for example, a deposit on an overseas property. The currency is purchased from a broker and will usually need to be settled within 2 working days. This method is the best way to buy currency quickly and at the best exchange rate.

Forward Contract

A forward contract allows you to fix the exchange rate now for a specific date in the future. Forward contracts are ideal when you only need foreign currency at some point in the future but don