(21 October 2024 – United States) Bank of America (BofA) is simplifying foreign exchange (FX) risk management with the introduction of Guaranteed FX Rates of up to one year, the longest tenor currently available industry-wide.
The value and volume of cross-border payments has increased exponentially in recent years with the bulk of new volumes generated by firms in eCommerce, services, manufacturing and “gig” sector verticals. Growth is also being driven strongly by technology innovation.
The bank hopes this solution can help companies mitigate exposure to currency fluctuations and simplify treasury management processes such as forecasting and reconciliation by locking in exchange rates for 180 days or now up to 365 days to ease payments flows, simplify reconciliation and reduce accounting noise due to daily mark-to-market.
Guaranteed FX Rates are offered for 200 currency pairings across multiple tenors with the one year available in 37 currency pairs. The most notable volumes are linked to USDMXN, EURUSD, USDCAD, GBPUSD, EURCZK and AUDUSD.
“For corporate treasurers, volatile FX markets exacerbate the challenge of cash flow forecasting. Securing guaranteed FX rates of longer tenors can help them improve forecasting, which will lead to better informed decision-making” stated BofA Head of Transactional FX in Global Payments Solutions, Daniel Stanton.
“When FX risk is managed appropriately and efficiently, it can bring enormous value to companies that process large volumes of cross-border payments. As our clients’ business models have evolved, these volumes have increased, and so too has the appeal to lock in FX rates with longer tenors” commented BofA Head of Transactional FX Trading in Global Markets, Bhupen Velani.