Foreign exchange markets often remain volatile and risks associated with it are higher than inherent risks to interest rate. The corporate entities from time to time get their cash flows exposed to foreign exchange risks. Ajman Bank Treasury is focused to cater to the requirements of our customers within Shari’ah and internal guidelines. The Treasury offers the most competitive rates in the market.
a) Spot Foreign Exchange
Foreign Exchange is the mechanism of converting one unit/s of a currency into another currency. Foreign exchange transactions are executed either between banks or bank and customer. A foreign exchange transaction, which is executed with an exchange rate prevailing on the date of transaction, is called a Spot Foreign Exchange transaction.
b) Forward Foreign Exchange
A Forward Foreign Exchange transaction is a predetermined contract in which the conversion of the currency or delivery will take place at a future specified date with a predetermined exchange rate.
A proactive hedging strategy will then be recommended to the customer using a Shari’ah compliant product such as Unilateral Promise to Purchase Foreign Currencies which will facilitate Ajman Bank´s Treasury to cater the future Foreign Currency requirements and to protect against the risks associated with future foreign currency exchange exposure.