Media type · Rate movement
FX buffer
Extra money set aside for rate movement before a payment.
Key facts
| Covers | Rate movement |
|---|---|
| Sized | As a percentage |
| Not | A prediction |
| Use for | Fixed future payments |
| Review | As the date approaches |
Fixed payments, fixed risk
Rent, tuition and deposits are fixed amounts in a foreign currency. The longer the gap before payment, the more the rate can move. A buffer or an early conversion reduces the exposure.
Frequently asked questions
Should I convert early?
For fixed near-term costs, converting early removes the risk. For flexible costs, a buffer may be enough.
Is a buffer the same as a fee?
No. It is money held against a possible loss, not a charge.