Following growth in cross-border payments, Bank of America on Sunday introduced Guaranteed FX Rates of up to one year, the longest tenor available in the industry.
The rise in e-commerce businesses, services, manufacturing and the gig economy has resulted in dramatic increases in both the volume and value of cross-border payments in recent years.
Long-term guaranteed fixed rates allow corporate treasuries to enhance financial stability, optimize liquidity, and align cash management practices with overall corporate strategy. It offers predictable returns, stable cash flow, interest rate protection and long-term liquidity planning.
“When FX risk is managed appropriately and efficiently, it can bring enormous value to companies that process large volumes of cross-border payments,” states Bhupen Velani, head of Transactional FX Trading in Global Markets at Bank of America. “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.”
BofA launched Guaranteed FX Rates beyond a 24-hour period eight years ago, supporting over 200 currency pairs. The one-year tenor is available in 37 currency pairs.
Daniel Stanton, head of Transactional FX in Global Payments Solutions, Bank of America, says 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.”
By forecasting cash inflows with greater accuracy, it allows for better budgeting and financial planning. With fixed returns, treasury departments can strategically manage cash reserves, deciding when to deploy excess cash or when to maintain liquidity for operational needs. Guaranteed rates also allow treasurers to align cash management strategies with long-term corporate financial goals, optimizing the use of excess cash for strategic investments.
Guaranteed FX Rates can be obtained by BofA clients through the CashPro platform and via SWIFT with no additional technology changes required.
Long-term guaranteed fixed savings rates can be mutually beneficial, creating stability for both corporates and banks in a fluctuating economic environment. While they might not offer the same returns of some of the riskier FX products, the stability they provide makes them an attractive option.
