★ GUIDE · FORWARD CONTRACTS · 2026

Lock today's rate. Pay later.

A forward contract is an agreement to exchange a fixed CAD amount for a fixed USD (or any other currency) amount at a specific future date — at today's rate. Used by businesses to hedge import costs and by individuals to budget against large future expenses like overseas tuition, property purchases, or annual snowbird budgets.

★ HOW IT WORKS

3 steps

You commit today

"I want to buy $100,000 USD for delivery on Sept 15, 2026 at today's rate of 1.3450."

Provider locks the rate

Knightsbridge / OFX hedges in the interbank market. You owe CAD $134,500 on Sept 15.

Settle on date

On Sept 15, regardless of where CAD/USD trades, you pay $134,500 CAD and receive $100,000 USD.

★ WHEN TO USE

Lock vs gamble

★ USE A FORWARD

You're buying a US property and closing in 60-180 days
You owe foreign tuition in next semester
You're hedging a known business expense (importer/exporter)
Your inheritance is being repatriated in 3-6 months
The rate is currently favorable and you can't afford a 5% swing

★ DON'T USE A FORWARD

You think you can time the market and want to wait
Amount is less than $25,000 — too small to justify
Delivery date is < 30 days — just do a spot transfer
You're speculating on FX moves rather than hedging
Your cash flow can't support the eventual CAD obligation

★ THE RISK

Forwards are a two-way street.

If you lock at 1.3450 and CAD/USD moves to 1.3100 by your delivery date, you're effectively paying more than spot — by ~2.6%. The benefit is certainty, not direction. Don't enter forwards thinking you're calling the market — enter them when uncertainty about the rate matters more than getting the best possible rate.